Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ROYAL NAVY

International Indian Ocean Expedition

Mr. Hector Hughes: asked the Civil Lord of the Admiralty if he will make a statement on the work, progress and results achieved by the international squadron of research vessels exploring the southern seas; and when they will turn their attention to the North Sea and adjacent seas.

The Civil Lord of the Admiralty (Mr. John Hay): The International Indian Ocean Expedition will not complete its research programme until September of this year and it is too early to assess the preliminary results. In due course, data received from R.R.S. "Discovery" will be published by the Royal Society on behalf of the National Oceanographic Council.
I would refer the hon. and learned Gentleman to the reply which I gave him on 19th June last in which I stated that there is no proposal that the group of ships which have converged on the Indian Ocean to play their parts in this international project of common world interest should transfer their activities to the North Sea or northern waters.

Mr. Hughes: I am obliged to the hon. Gentleman for that reply, but does he realise that in fishing matters his first duty is to fishermen in British waters, and will he take steps to see that whatever scientific advantages ensue from the present expedition are made public so that the British fishing industry, and, in particular, the Scottish fishing industry, may be helped? Is he aware that

there are many problems outstanding which call for such assistance?

Mr. Hay: Yes—I am much obliged to the hon. and learned Gentleman—but I must point out that I have no direct responsibility for fisheries or fishery research. However, it is true that some of the lessons being learned by this survey in the Indian Ocean may have beneficial results when applied to fishery research in general in other parts of the world.

Royal Naval Auxiliary Service

Mr. Loveys: asked the Civil Lord of the Admiralty whether he is satisfied that the Royal Naval Auxiliary Service is organised to fulfil a useful function in the defence of the realm; and if he will make a statement.

Mr. Hay: Yes, Sir. Without doubt, the Royal Naval Auxiliary Service makes a valuable contribution to national defence. The members of this spare-time civilian Service are organised and trained to perform important duties in war which would otherwise have to be done by active Service men. The country owes a debt of gratitude to the members of this Service for giving up their time to prepare themselves for these duties.

Mr. Loveys: I thank my hon. Friend for that reply, with which I agree and which will be well received by the Service, but will he accept the special need for having more up-to-date equipment, especially R.T. sets, as many of the present ones being used are hopelessly out of date and, indeed, are of a type which can be purchased at many surplus stores for a few shillings?

Mr. Hay: This is largely a question of priorities. We have demands of great complexity for telecommunications equipment for the Fleet and for shore establishments. We are at the moment looking at the problem of equipment for the Royal Naval Auxiliary Service, and I shall try to expedite a decision about it.

Gannet Aircraft

Mr. Critchley: asked the Civil Lord of the Admiralty what progress has been made in deciding upon the replacement for the Gannet aircraft in service with the Royal Navy.

Mr. Hay: The Gannet Airborne Early Warning Mk. III aircraft has been in operational service for only about four years, but we are considering the characteristics of its successor and a preliminary study has been completed for us by the Ministry of Aviation.

Oral Answers to Questions — BRITISH ARMY

Woolwich Arsenal

Mr. Turner: asked the Secretary of State for War whether he will take steps to expedite the inter-Departmental inquiry into the future use of the remaining 700 acres of Woolwich Arsenal land, and in particular that land to be vacated by the Royal Ordnance Factory on its closure.

The Under-Secretary of State for War (Mr. Peter Kirk): We are conducting the inquiry as quickly as possible.

Mr. Turner: Does my hon. Friend appreciate the great difficulties confronting the London County Council or the Borough Council of Woolwich until it is known what is to happen to the remaining part of the Arsenal land? It is impossible for anyone, either public authority or private enterprise, to make any plans at all for Woolwich until it is known what has to be cartered for.

Mr. Kirk: Yes, we do appreciate that and we are pressing on as fast as we can.

Mr. Mayhew: In the meantime, will the hon. Gentleman give an assurance that he will not dispose of this land to other authorities without the agreement of the planning authority?

Mr. Kirk: We shall, of course, be going through the normal procedures with the planning authorities in this matter.

Mr. Mayhew: asked the Secretary of State for War how many persons are employed in Woolwich Arsenal other than at the Royal Ordnance factory; and when he expects to reach a decision about the future of the Arsenal.

Mr. Kirk: About 2,400. A decision will be made about the future of Woolwich Arsenal as soon as possible.

Mr. Mayhew: In the meantime, will the Minister confirm that there is no

intention of closing down the Arsenal as distinct from the R.O.F.?

Mr. Kirk: There is not, subject to the review at present being conducted by my Department

Land

Mr. Frank Allaun: asked the Secretary of State for War what was the acreage of Army land in 1951, 1956, and 1963; and what was the acreage of land per man in the Army in those three years.

Mr. Kirk: In 1951, 1956 and 1963, the War Department held and used in the United Kingdom 609,000; 568,000; and 461,000 acres of land respectively. Related to the field force units of the Regular Army in this country, the per capita figures were 16·2, 12·1 and 15·0 acres respectively.

Mr. Allaun: Recently, it has gone up. Is the hon. Gentleman aware of the resentment that, despite smaller manpower, the Army is keeping its clutches on hundreds of thousands of acres of land badly wanted for housing, farming, or for access to the countryside? Some of the most beautiful parts of the country are still held.

Mr. Kirk: The total figures have gone down, as I said The per capita figure appeared to have gone up with the end of National Service. In fact, since 1957, we have given up about 135,500 acres of land, and we dispose of it as soon as it becomes surplus to requirements.

Sniping; Rifle (Standardisation)

Mr. Shinwell: asked the Secretary of State for War whether the British sniper rifle calibre has been standardised with the rifle adopted by the North Atlantic Treaty Organisation.

Mr. Kirk: No, Sir. Not yet.

Mr. Shinwell: Does the hon. Gentleman realise that there has been talk about the standardising of this rifle for the last 10 or 12 years? What is standing in the way? Who is responsible for the inhibition—the Americans, the Belgians, the Dutch or the French, or is it the War Office?

Mr. Kirk: As I explained to the right hon. Gentleman on 11th December, the project for fixing the 7·62 mm. rifle with


a telescopic sight has not been very high in our priorities because the ·303 has been adequate, and the requirement for sniping rifles for the Army is extremely small.

Mr. Shinwell: Why does the hon. Gentleman say that it is not high in the priorities? Is he aware that, in 1950, I headed a delegation comprising, in particular, two high-ranking officers from the War Office to negotiate with the Americans, the Canadians and other countries associated with N.A.T.O. on the subject of a standardised rifle? Why does the hon. Gentleman say that there is no particular priority?

Mr. Kirk: One must make a distinction between the rifle and the sniping sight for the rifle. The rifle we have already; the sniping sight we have not yet got.

Mr. Speaker: Mr. Shinwell.

Mr. Shinwell: I am flabbergasted. Question No. 12.

Mr. Speaker: I did not hear what the right hon. Gentleman said, but I called him to ask Question No. 12. I gather that he has.

Mr. Shinwell: I merely said, almost sotto voce, Mr. Speaker, that I was flabbergasted.

Mr. Speaker: It was so sotto vocethat I was not sure whether Question No. 12 had been asked. But it has been.

War Department (Staff)

Mr. Shinwell: asked the Secretary of State for War what reduction in the civilian and military staff of his Department will be effected when the Defence (Transfer of Functions) Bill becomes law.

Mr. Kirk: When the Bill becomes law, some 500 military and civil staff of the War Department will be transferred to the central element of the new Ministry of Defence on 1st April, 1964. There will be no other immediate reductions in the present War Office staff as a directresult of the changes provided for in the Bill, but the progressive reduction maintained since 1961 will continue and may in due course be accelerated.

Mr. Shinwell: Does that mean that, in spite of all the talk about the co-

ordination of the defenceorganisation, there is only to be the transfer of 500, civil and military, from the War Office to the new Defence Department, and no actual reduction in the War Office taking place? Was not this thought out before the Bill was introduced in the House?

Mr. Kirk: Of course it was, but the initial step will simply be to transfer 500 from the higher echelons. The size of the War Office staff has been falling steadily during the past 10 years, and will continue to do so.

Mr. Paget: It is rather worse than that,is it not, because the staff of the Defence Ministry is going up by more than the reduction which is going on in the number of civil servants employed by the other Ministries?

Mr. Kirk: Questions about the staff of the Defence Ministry as a whole should be directed to my right hon. Friend the Minister of Defence.

Royal Ordnance Factory, Woolwich (Mensforth Report)

Mr. Mayhew: asked the Secretary of State for War if he will publish, in part or in whole, the Mensforth Report on the Royal Ordnance Factory, Woolwich.

Mr. Kirk: No, Sir. As stated by my right hon. Friend's predecessor and by my right hon. Friend on 10th April and 14th May, 1963, Sir Eric Mensforth was asked to give independent advice on the future of the Weapons and Fighting Vehicles Group of Royal Ordnance Factories which was currently the subject of Departmental examination. He did so confidentially and in a form not designed for publication as a self-contained report.

Mr. Mayhew: Nevertheless, is the hon. Gentleman aware that it is hard to believe that there is any serious objection, for instance, from the security angle, to the publication of this report? The Government have not made out their case yet for closing down the R.O.F. Would it not be fair to those concerned to show the reasoningbehind the decision?

Mr. Kirk: No, Sir; there are strong reasons why the report as such should not be published. We have made out


a very strong case, not only in my right hon. Friend's original statement but in the Adjournment debate which the hon. Gentleman was, unfortunately, prevented from attending.

Cyprus

Mr. Paget: asked the Secretary of State for War if he will make a statement on the Army's contribution in the Cyprus crisis.

The Secretary of State for War (Mr. James Ramsden): Following the outbreak of violence in Cyprus last month, the Government of Cyprus accepted an offer by the British, Greek and Turkish Governments to assist in its efforts to secure the preservation of the cease fire and the restoration of peace.
Since Christmas the 1st Battalion the Gloucestershire Regiment, the 3rd Green Jackets, 33 Field Squadron Royal Engineers and a squadron of the 14/20 Hussars, together with elements of the Strategic Reserve from this country, have been engaged in a wide range of tasks: these include the exchange of refugees; taking over road blocks and restoring normal traffic; providing survival rations for villages cut off from normal supplies; evacuating casualties; and restoring communications.
I think that we can be justifiably proud of what we have achieved, and I believe that the people of Cyprus have welcomed the presence of British soldiers.

Mr. Paget: Is the right hon. Gentleman aware that they have had every reason to welcome that presence, and for that not only the people of Cyprus but I think the people of this country and of all the N.A.T.O. countries have equal grounds for being grateful? Could the right hon. Gentleman tell us, however, whether the R.A.F. patrols have been equally engaged on these duties and whether in fact naval patrols have also been engaged and whether this form of urban support to the civil power is something which can be done by the three Services?

Mr. Ramsden: I am obliged to the hon. and learned Gentleman, and so will the soldiers be, for the remarks in the first part of his supplementary question. He asked me about the use

of British soldiers, which is within my responsibility, so that was what I gave him in the Answer. It is, of course, true—I welcome the opportunity of saying this—that, Cyprusbeing principally a Royal Air Force base and the Air Officer Commanding in Chief being in overall charge, the Royal Air Force has been involved and the Royal Air Force Regiment has played its part in the truce force beside the soldiers of the British Army. I am not aware of any participation by the Navy.

Mr. Emrys Hughes: Can the right hon. Gentleman tell us whether the cost of these operations is to fall on the shoulders of the British taxpayer, or are the Cyprus, Government, who, presumably, are using our soldiers in fact as policemen, being asked to pay any of the cost?

Mr. Ramsden: I think that the hon Gentleman will have to put a Question down.

Mr. Driberg: Could the right hon. Gentleman say whether, when troops are sent to Cyprus who have not been there before, they are given any briefing on the background to the troubles in which they are helping to keep the peace? If so, is that left to individual commanding officers, or is general guidance given by the War Office or any other Department? If the latter, will he put that guidance in the Library?

Mr. Ramsden: I am not aware of anything I could make available to hon. Members in the Library. It is the normal duty of commanding officers—and we do everything to help them to be in a position to discharge it—fully to brief their troops on any background to any operation or exercise in which they are engaged.

British Army of the Rhine

Mr. Paget: asked the Secretary of State for War when it is now proposed to bring the British Army of the Rhine up to the level necessary to fulfil Treaty obligations.

Mr. Ramsden: As I told my hon. Friend the Member for Wycombe (Mr. John Hall) on 18th December last year, as soon as possible. Our ability to reach 55,000 depends on a satisfactory


rate of recruitment and on the military demands of other overseas theatres. I am not therefore in a position to give a precise date.

Mr. Paget: Can the right hon. Gentleman, however, reassure our N.A.T.O. allies that there is no weakening of our resolution to fulfil this duty to them?

Mr. Ramsden: Yes, Sir, and I feel that they, too, accept that, certainly as regards the Cyprus aspect of this situation, what we are doing is a service to N.A.T.O. as a whole, in a dispute in which two member countries of N.A.T.O., indirectly at any rate, are involved.

Captain Litchfield: Would not my right hon. Friend agree that troops employed on the flanks of N.A.T.O. are fulfilling just as important a in the interests of N.A.T.O. as those employed in the British Army of the Rhine?

Mr. Lipton: Is it not a fact, as confirmed by The Timesnewspaper today, that the Government have in hand the return of three battalions from the Rhine Army and that most of the 17 battalions now in Germany are of less than 600 infantryman? In these circumstances, has not the time come to give very serious consideration to withdrawing the Rhine Army altogether and basing it in this country or somewhere else where it would be of much greater use?

Mr. Ramsden: No, Sir. I understand that the article in The Times refers to the reorganisation of the British Army of the Rhine which my right hon. Friend the Minister of Defence announced on 26th June last year. This reorganisation, which does not involve reduction in manpower in the British Army of the Rhine, and which isaimed at achieving more balance and a more effective fighting force, is in no way connected with the present situation in which British troops in reserve have had to be sent overseas.

Sir J. Eden: Given adequate air transport, is it not very possible that our duty towards our N.A.T.O. allies could equally well be discharged without having to have a full complement of troops on the ground in Germany?

Mr. Ramsden: That is another question, and opens up wider issues which, I

think, are not appropriate to this particular Question.

Mr. Bellenger: Will the Secretary of State really come clean, as one of his predecessors said he would some years ago? Is it not the case that this pretence of keeping the Rhine Army up to guarantee is impossible in circumstances like those we are now having? Why not say so, so that our allies and everybody else know it to be the fact?

Mr. Ramsden: No, Sir. In the long term, the planned build-up to the Treaty figure will proceed in the way I have indicated previously to the House.

Requirements

Mr. Frank Allaun: asked the Secretary of State for War by what number he estimates the Army will fall short of requirements in the coming year; and whether he will give an assurance that he will not reintroduce conscription.

Mr. Ramsden: I cannot make an exact forecast, but I anticipate that by the end of 1964 the margin of some 5 per cent. by which the Army at present falls short of its target will be reduced to about 3 per cent.
We have no intention of reintroducing conscription.

Mr. Allaun: Yes, but as the Government, for obvious reasons, will not reintroduce conscription just before a General Election, will the Secretary of State give an assurance that in the unhappy event of this Government being returned they will not reintroduce conscription after the election?

Mr. Ramsden: The Government will do their duty in any circumstances without regard to the dates of a General Election, but the present circumstances do not warrant a reintroduction of conscription.

Mr. John Hall: Would not my right hon. Friend agree, in view of the recent statements about the defence policy which would be followed by the Opposition in the unlikely event of their filling the benches on this side of the House, that this particular Question might better be addressed to the Opposition Front Bench?

Mr. Speaker: It is not part of a Minister's responsibility to answer that.

Mr. Ellis Smith: Very interesting.

Mr. Paget: Could the right hon. Gentleman say how the 3 per cent. is distributed amongst the various corps—where he really expects his principal shortfall?

Mr. Ramsden: I would have to give the hon. and learned Gentleman the details.

Mr. Allaun: Are there not very serious manpower shortages in the hospitals, in the schools and in the transport services? Why should the claims of the Army alone be sacrosanct? As there are 432,000 men in the three Services, could not some of those, if necessary, be transferred to the Army?

Mr. Ramsden: What the hon. Member is saying, I think, is in support of our policy of raising the Army on a voluntary basis, where people have the opportunity of choosing what they wish to do.

SCOTLAND

Prerogative of Mercy

Mr. Hector Hughes: asked the Secretary of State for Scotland if he is aware that the present manner in which the prerogative of mercy is exercised is unsatisfactory; and if he will take steps to arrange in such cases that reasons are published for advising agreement to or refusal of such exercise of the prerogative.

The Secretary of State for Scotland (Mr. Michael Noble): The answer to both parts of the Question is "No, Sir".

Mr. Hughes: Does not the Secretary of State realise that the present practice is inconsistent with the time-honoured system of trial by judge and jury, the giving of evidence publicly adduced and cross-examined, and that the present practice of acting on extrinsic evidence given to him secretly is entirely wrong ethically and inconsistent with British justice? Will he look into that, and see that this practice is changed, so that British traditions and British justice may be honoured in the future?

Mr. Noble: I am afraid that I cannot agree with the hon. and learned Gentleman that my practice is different from

that which has been carried out by my predecessors in the Scottish Office, or in the Home Office. I think the practice has been established by long tradition. I am carrying it out to the best of my ability.

Mr. Hughes: On a point of order. The Secretary of State obviously misunderstood my supplementary question. I did not say that he was carrying out a different practice. I said that his practice—

Mr. Speaker: Obviously, misunderstandings by Ministers, whether obvious or not, do not raise points of order.

Hydro-Electricity Scheme, Laidon

Mr. Millan: asked the Secretary of State for Scotland why the North of Scotland Hydro-Electric Board's Laidon scheme in Perthshire has been included in the public inquiry into the Fada-Fionn scheme in Wester Ross, since there are no objections to the Laidon scheme and there is no connection between the two schemes; what matters concerning Laidon have been or will be considered by the inquiry; and on how many occasions in the past there has been an inquiry into a scheme to which there have been no objections.

Mr. Noble: The Fada-Fionn inquiry was extended to cover the Laidon scheme because the problems that arise in assessing comparative costs of alternative methods of providing the power appeared to be similar in both schemes. I trust however that the inquiry will deal with all considerations relevant to either scheme. There has been no previous inquiry into an unopposed scheme.

Mr. Millan: Is it not really extraordinary that we should have an inquiry into the Laidon scheme when there are no objections to the scheme, and when this is a scheme which the Mackenzie Committee specifically said met the economic tests laid down by that Committee and which the Government are now proposing to follow? Does not the introduction of evidence about the economics of different kinds of hydro-electricity schemes at a public inquiry tend to make the inquiry confused and, indeed, chaotic—as happened last week at this particular inquiry? Why does not the right hon. Gentleman take the


decision about economics, since this is something which ultimately has to be decided by him in any event? Why shuffle this off on to a public inquiry?

Mr. Noble: I do not think it is extraordinary. Under the Act I can authorise schemes only if I think they are in the public interest; and quite clearly, the economics of a scheme are just as important in the Highlands as they are in the South. This inquiry is being carried out by a distinguished lawyer and a distinguished professor of economics, and it will be of advantage to me and to Scotland to have their assessment of the position.

Sir John MacLeod: But is the Secretary of State satisfied that this inquiry honours the 1943 Act? Surely he could have had experts to inquire into the economics of this, without a prolonged public inquiry? How long is this inquiry going to take? It is very unsatisfactory that there should be delay and that people should not realise what the outcome is to be for, perhaps, some very long time.

Mr. Noble: I do not think I can answer my hon. Friend by saying exactly how long it will take, but the procedures of the inquiry into the Fada-Fionn scheme are in accordance with the Act passed by this House, and the extra inquiry into the Laidon scheme will not, I think, add to any great extent to the length of time of the complete inquiry.

Mr. Ross: Yes, but surely, is notthe position not only unsatisfactory but also really incredible, bearing in mind that this was one of the subjects which was supposed to be dealt with by the Mackenzie Committee, and secondly, that it was a subject which was supposed to be dealt with in discussions between the two boards in order to guide the Secretary of State? Now, for the first time, we have this unprecedented position of a scheme to which there is no objection being subjected to a public inquiry. Why does the right hon. Gentleman not take the decision himself? Has he received any representations from the local Member of Parliament about this, or has he discussed it with him?

Mr. Noble: The answer to the last part of the hon. Member's supple-

mentary question is "No, Sir." On the first part, the Mackenzie Committee considered the economics in only one sphere and specifically excluded from its consideration the question of capital costs which, with hydro-electric schemes costing approximately three times the amount of equivalent generation by other methods, is clearly an important consideration.

Mr. Woodburn: Is the right hon. Gentleman aware that there is a suspicion in Scotland that somebody is raising every kind of obstacle to the development of hydro-electricity? There is evidentlya complete misapprehension among some of the people who advise him about the purpose of hydro-electricity. It is not competing in any way with steam. It is complementary and supplementary to steam and is generally used for supply at peak load when electricity cannot be supplied economically by steam stations.

Mr. Noble: These are exactly the points which one hopes this inquiry will bring out.

Mr. Millan: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Adjournment.

New Hospital, Motherwell

Mr. Lawson: asked the Secretary of State for Scotland if he can now state when the building of the new Strathclyde Hospital at Motherwell is to commence.

Mr. Noble: The published hospital plan said that this new district general hospital would be started between 1966 and 1971. On present planning it should start about 1968.

Mr. Lawson: That is an exceedingly disappointing Answer. Is the Secretary of State aware that there is a very urgent need for this hospital in this area, which is part of a designated growth area where so much money is supposed to be spent? Taking these things into account, will the right hon. Gentleman ensure that this date is brought forward by at least three years?

Mr. Noble: I think that it is fair to say that all the district general hospitals in the Western Region are of considerable importance. The regional hospital


board has studied them all. It is planning simultaneously a great deal of the work in building these hospitals and it is its view that 1968 is the suitable date. In fact, in view of the amount of work which has to be done in planning this hospital, it would be very difficult to advance it very much before that.

Dr. Dickson Mabon: Since the right hon. Gentleman claims that a new hospital is being started every 19 days, will he confirm that the Strathclyde Hospital is the last hospital to go to Scotland?

Mr. Noble: That is not true.

Smoke Control Areas

Mr. Millan: asked the Secretary of State for Scotland if he will state, for each smoke control area order so far confirmed, the Exchequer grants paid to date in respect of adaptations required to private dwellings, the number of dwellings concerned, and the average grant per dwelling.

Mr. Noble: Under the 46 orders which have been approved 67,000 private dwellings are estimated to qualify for conversion grant. The total Exchequer grant is likely to be about £800,000 or about £11 16s. per dwelling on average. I am sending the hon. Member a table with details for each area.

Coatbridge Technical College (Examinations)

Mr. Dalyell: asked the Secretary of State for Scotland on what date Mr. Alexander Love, of Shaw Avenue, Armadale, in the West Lothian constituency, was told orally by staff at Coatbridge Technical College to submit application forms for his 1963 examinations in electrical and mechanical engineering.

Mr. Noble: Investigation by Lanarkshire Education Committee has not established whether such information was given orally. In view, however, of the other means used to notify examination entry dates to students, the Committee decided that the college staff were not responsible for the failure of Mr. Love and two other students to apply in time.

Mr. Dalyell: Since there has been so much confusion and correspondence over

this case, would it not be chivalrous to give the young man in question the benefit of the doubt?

Mr. Noble: It would not be right for me to interfere with the arrangements which the education authority and the joint committee have made.They have allowed these two people not to have the rest of their programme held up but to sit the examination at the next opportunity, and I think that this is the right compromise.

Mr. Dalyell: Does the right hon. Gentleman realise that it is asking a lot of a young man who has many other examinations to take to go on doing past examinations in which he has in any way been successful?

Mr. Noble: I agree that it is perhaps bad luck for these young men, but they are not all that inexperienced. They had ample opportunity for studying the proper method of application for these examinations, and I think that we must give students of this age the credit for being able to take some responsibility for looking after their own affairs.

ROADS

Ring Road, Leicester

Sir B. Janner: asked the Minister of Transport whether he has concluded his inquiries about the urgent need for construction of the twin highway ring road leading from Scudamore Road to Hinckley Road, Leicester; and if he will include the construction of this highway in his programme for the immediate future, as it is of importance to the industries in the area.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): As my right hon. Friend said in his letter to the hon. Member on 20th November, the ring road is not among the most urgent of schemes needing to be undertaken even in Leicester itself. We do not expect to be able to find a place for it in the road programme during the next few years. The construction of the small section of the ring road between the two roads referred to would have no value for through traffic and we could not justify grant for it.

Sir B. Janner: That is a shocking reply. Does the Parliamentary Secretary realise that this road is being used by and is needed for very important industries, including the A.E.I., and that they are frustrated in not being able to get their products to their home markets as well as to their export markets? What is the idea in not providing for such a road as is asked for in the Question? Is the hon. and gallant Member saying that he proposes to open only 28 miles of motorway this year and also to do nothing in this respect? Will he do nothing to help exports? Will he consult the Secretary of State for Industry and Trade about this matter?

Vice-Admiral Hughes Hallett: What I am saying is that both we and the city council believe that other schemes in the city should have higher priority than this one.

Sir B. Janner: Is the hon. and gallant Member aware that the city council does not believe that that is so and that it is only because of the parsimonious way in which the Ministry is helping it financially in respect of its roads that it cannot get on with this one, which is essential to the industries of Leicester?

Vice-Admiral Hughes Hallett: I cannot accept what the hon. Member says.

Roundabouts

Mr. Wingfield Digby: asked the Minister of Transport whether, in view of the finding of the Crowther Report that roundabouts are an obstruction to traffic, he will immediately curtail expenditure on construction of new roundabouts and spend more on flyovers instead.

The Minister of Transport (Mr. Ernest Marples): The Report suggests that many of the more important new roads in cities should be free from crossroads and roundabouts if they are to carry the very heavy volumes of traffic that are likely in the future. I would agree with this. An increasing number of flyovers or underpasses are already being provided or planned in the larger towns, and on the more important roads outside towns, where their provision is justified by the volume of traffic and can be made economically.

Mr. Digby: Is my right hon. Friend aware that this Report also says that America is a generation ahead of us in the motor age and that they havevirtually stopped making roundabouts in the United States, according to information which I received when I was in Washington?

Mr. Marples: That is true, but the problem in the United States is somewhat different from that in this country. If we had the same density of population as the United States, we would have only 2½ million people.

Mr. Popplewell: Roundabouts are entirely outmoded and outdated, particularly in the country areas. Is not the Minister aware that his Department and various local authorities have wasted a very large amount of money in building roundabouts which have had to be done away with and flyovers or underpasses erected in their place? Will the right hon. Gentleman have another look at this and ensure that in future roundabouts are not considered, at any rate on roads in the countryside?

Mr. Marples: This depends on the volume of traffic. If the volume of traffic is exceedingly heavy, clearly a flyover or underpass is desirable. On the other hand, if it is extremely light it is an unnecessary extravagence, and it is better to build a roundabout at about one-fifth of the cost to start with and provide for the eventual building of an underpass or overpass.

Motorways

Mr. Wingfield Digby: asked the Minister of Transport whether,in view of the forecast of the Buchanan Report on the foreseeable increase in motor vehicles, he will now adopt the United States system of building all new roads of motorway standard with a broad central strip, which can later be used to provide two extra lanes.

Mr. Marples: No, Sir. The number of lanes to be provided on motorways is determined by an assessment of traffic needs 20 years ahead. To provide space in the central reserve for additional lanes would cost almost as much as providing the full carriageway-width initially, since


land requirements are the same and embankments, cuttings, bridges must be built to accommodate the future requirements. While the extra lanes were being constructed, the capacity of the existing carriageways would be very seriously reduced.

Mr. Digby: Is it not clear from the Buchanan Report—and the figures in that Report are very striking—that we have been underestimating the increase in traffic and that already some of the new motorways which we have been making, like the Meriden by-pass, are inadequate for the volume of traffic at the time that they are completed? Surely here again we can learn from the American example.

Mr. Marples: We have studied a great deal of what has happened in America, but I should be glad if my hon. Friend would give me an example of any motorway in this country which is seriously overloaded.

Mr. Holt: Does not the Minister accept that the rate of completion of the motorways which he is building now is deplorably inadequate? What does he propose to do to speed it up, not only in view of the information which we have already, but particularly in the light of the Buchanan Report?

Mr. Marples: The Buchanan Report does not deal with motorways so much as with roads in the cities. Generally speaking, motorways are in between towns. With regard to urban motorways, we must be careful that we build them in the right place and in the right way, and that means traffic surveys.

Mr. P. Williams: Is my right hon. Friend aware that most of the people who travel on the Great North Road will welcome the construction of dual carriageways as they are being constructed but that there is doubt about the construction of the bridges over the motorways? These bridges are constructed in such a way that the two lanes cannot at a subsequent date be made into three lanes. This is an unnecessary and wasteful economy.

Mr. Marples: Technically, it is extremely difficult to build a road for only two carriageways and to extend it

to three. It is much better to build two or three carriageways in the first place and to leave it at that.

M.1 Motorway (Enderby Spur)

Mr. Farr: asked the Minister of Transport by what date he now expects the Enderby Spur, connecting Narborough Road South with M.1, to be in use.

Vice-Admiral Hughes Hallett: Spring, 1965.

Mr. Farr: While thanking my hon. and gallant Friend for that reply, may I impress on him the urgent necessity of improving Narborough Road South which will connect with the motorway, because in its present condition it is liable to be choked with motorway traffic?

Vice-Admiral Hughes Hallett: We appreciate that, but, as explained before by my right hon. Friend, there are statutory processes which have to be completed, and we are getting on with them as fast as we can.

Road Accidents

Mr. Spriggs: asked the Minister of Transport if his attention has been drawn to the number of people killed and seriously injured on the roads; what steps he is taking to reduce road accidents; and if he will make a statement.

Mr. Marples: Yes, Sir. This problem is one with which I am constantly preoccupied. During the past four years I have introduced many measures designed to improve road safety and this will continue to be one of my most important objectives.

Mr. Spriggs: Is the Ministeraware that in the four months from July to October, 2,558 people were killed on our roads in road transport accidents and 32,941 were seriously injured? Is it not time that the Minister had another look at the Government's policy which aims at closing more stations and branch lines, and which will have the effect of forcing more people on to the roads long before our road transport system is ready to receive them? Will he undertake to look at the question of setting up a ministry of road safety, or, at the


least, a committee of inquiry to give this House a full report on the causes of these accidents, and give the committee real teeth with the power to make inquiries, so that we can be properly informed and the Government may have at least a policy which will reduce the number of deaths on the roads?

Mr. Marples: No one takes the question of road accidents more seriously than I do. It is a most baffling problem. Ultimately, it comes down to the individual responsibility of the driver. I do not think the number of stations closed in the last four months has had an adverse effect, because hardly any have been closed. If the hon. Gentleman has any suggestions that I or the Government can consider to help road safety, we shall be very glad to receive them.

Mr. Spriggs: I have made them. In view of the most unsatisfactory reply to my Question, I wish to give notice that I shall raise this matter on the Adjournment at the earliest possible moment.

A.19–A.168 Road

Mr. Bottomley: asked the Minister of Transport when work is to be started on the A.19-A.168 road from Tees-side to connect with the A.1 road at Dishforth.

Vice-Admiral Hughes Hallett: The divisional road engineer is discussing with the North Riding County Council the programming of the comprehensive improvement of this route. Schemes have to be designed and Statutory Orders will be required to determine necessary realignments and diversions on some sections of the route. This preparatory work will be pressed ahead with all speed and I hope that work will start on some sections within two years and on all sections within five years.

Mr. Bottomley: Is it not possible to push forward at a more rapid rate? This and other road improvements around Tees-side are necessary if the Government's programme for economic development is to be carried out?

Vice-Admiral Hughes Hallett: I can assure the right hon. Gentleman that we are pressing these schemes forward as quickly as we can, and it is hoped to authorise the whole of the additional programme in the North-East in the next four to five years.

Mr. Turton: Is my hon. and gallant Friend aware that the most dangerous section of this road is that between Thirsk and the Clack Lane End junction, and that any improvement to the north of that section will only aggravate the dangers? Will he tackle this improvement from the right end, in order to decrease the number of accidents on this road where the volume of traffic is increasing week by week?

Vice-Admiral Hughes Hallett: That is a point that my right hon. Friend will bear in mind.

Calder Bridge Design Competition

Mr. Harper: asked the Minister of Transport if he will give the names of the five judges who selected four designs for a road bridge to span the River Calder at Wakefield.

Mr. Marples: Thejudges for the Calder Bridge Design Competition were—Sir Herbert Manzoni, Past President of the Institution of Civil Engineers and late City Engineer, Birmingham, who was the Chairman; Sir William Holford, Past President of the Royal Institute of British Architects; Mr. B. H. Broadbent, Chief Civil Engineer of John Laing and Son Ltd.; Mr. J. F. A. Baker, Director of Highway Engineering, Ministry of Transport; and Colonel S. Maynard Lovell, Past President of the Institution of Highway Engineers, County Engineer and Surveyor, West Riding County Council.

Mr. Harper: I thank the Minister for that reply, but may I ask whether he thinks that this was necessary for a bridge? Can he say in which journals the advertisements for the designs were placed, and can he explain how civil servants are expected to come to a proper decision when ostensibly the experts cannot come to it? When can the public expect the winning designs to be published?

Mr. Marples: The winning designs will be made public when they are displayed, with the unsuccessful designs, in the exhibition to be held at the Institution of Civil Engineers between 28th January and 7th February. The decision will not be made by civil servants but by me as the Minister. I am quite certain that it is good to have these competitions from


time to time so that new and younger designers can be given a good chance to show more adventurous designs. I think that it is wrong to continue placing designs with old-established firms without bringing in new blood.

Mr. Harper: Why were the applicants not told to send the designs to the Minister instead of to five judges, because he could at least have selected one design instead of having four at his disposal, as he has now?

Mr. Marples: They were examined by five individuals all of whom are very well qualified technically and only one of whom is a civil servant. The final decision cannot be shirked, because it can only be made by the Minister who it accountable to this House.

Mr. Harper: asked he Minister of Transport why he has awarded four prizes amounting to £6,000 for designs for one road bridge over the River Calder, near Wakefield.

Mr. Jeger: asked the Minister of Transport whether he will make a statement on the circumstances leading to the payment of £6,000 to be shared by four architects for designs for a bridge over the River Calder on the Leeds-Sheffield section of the M1; and who will decide which of the four designs is ultimately selected.

Mr. Marples: In December, 1962, as an incentive to bridge design in this country, I promoted a competition for the design of a major motorway bridge over the River Calder near Wakefield. The panel of judges I appointed recommended the division of the major prize of £5,000 between two competitors.Further prizes up to £3,000 in total could be awarded at the discretion of the panel. In the event, the panel decided to award two subsidiary prizes of £1,000 each. I accepted the panel's recommendations; £7,000 will, therefore, be awarded as prizes.
The winners are firms of consulting engineers; in one case an architect is associated with the engineers.
The panel did not recommend which design should be selected for construction. That decision is mine. The competition conditions do not bind me to build any of the winning designs.

Mr. Jeger: Will the right hon. Gentleman explain why it was necessary to award prizes to four architects when only one bridge is required and not four? Will he also explain why it was necessary to give a share in the major prize of £5,000 to the chairman of the Goole Conservative Association? [HON. MEMBERS: "Oh."]

Mr. Marples: I can assure the hon. Gentleman that there has certainly been no bias that way. The matter has been decided by the five people I appointed, and any innuendo is, therefore, against them and not me. I know nothing about that. The idea of having this competition and of giving prizes is to encourage young people to concentrate on design. It is designed to encourage them and to give them a chance, and I am certain that that is the right policy to pursue.

Accidents (Warning Signs)

Commander Kerans: asked the Minister of Transport whether, in view of the increasing accidents, he will introduce legislation to compel motorists to carry warning signs in their cars, as is done in certain European countries.

Vice-Admiral Hughes Hallett: My right hon. Friend is proposing to make regulations under the powers provided by Section 33 of the Road Traffic Act, 1962, which will authorise the use of such signs under prescribed conditions. The powers do not allow him to make the carriage of these signs in motor vehicles complusory, nor do we consider that it would be appropriate to do so before there had been some experience of their use in this country.

Commander Kerans: I thank my hon. and gallant Friend for that reply. It is a great step forward and anything of this nature which will prove itself in the months ahead to prevent concertina-like accidents on the M.1 and other road accidents will be welcomed by the public.

Christmas Road Accidents (Inquiry)

Mr. Strauss: asked the Minister of Transport what steps he proposes to take to discover the cause and prevent the repetition of the doubling of road deaths and injuries during the Christmas period.

Mr. G. Thomas: asked the Minister of Transport (1) whether he is aware of public concern at the loss of life due to road accidents at Christmas; and what steps he proposes to take to prohibit motorists driving after drinking alcohol;
(2) whether he will establish a committee to inquire into the relation between the Christmas road accidents and the drinking of alcohol by drivers: and whether he will make a statement.

Mr. George Craddock: asked the Minister of Transport what form the inquiry into the large number of fatal road accidents during the Christmas holiday will take.

Mr. Gresham Cooke: asked the Minister of Transport what form the special inquiry into road deaths at Christmas will take; by whom it will be carried out; whether it will take into account the questions of drink, road conditions, the wearing of safety belts, and the driving experience of the drivers concerned; and if he will make a statement.

Mr. Marples: I have asked the Road Research Laboratory to conduct a full and detailed inquiry into the fatal road accidents during the Christmas holiday period. The investigation will be designed to establish, so far as the evidence is available, all the relevant circumstances of each accident so that a detailed statistical analysis can be made. It will cover the possible effect that drinking may have had. I must wait to see what facts the investigation reveals before considering what action to take.

Mr. Strauss: I welcome such a comprehensive inquiry, but can there really be any doubt that the heavy incidence of road deaths during the Christmas period, which is invariable, is primarily the result of heavier drinking during the festive season? Since the Scandinavian countries, where much more drastic action is taken against drunken driving, had practically no road deaths during the Christmas period, will the right hon. Gentleman now consider adopting legislative measures similar to those operating in those countries, as my hon Friends and I pressed him to do when the 1962 Road Traffic Bill was before

the House, which proposals he rejected at that time?

Mr. Marples: That would, of course, necessitate legislation. The new legislation introduced in 1962 altered the definition of drunken driving from "unfit to drive" to
…if his ability to drive properly is for the time being impaired".
It required the courts to consider chemical tests and it increased the period of disqualification for a second offence within 10 years to a minimum of three years. That has been operative for nearly a year and we should see how it goes. [Hon. Members: "No."] If the report of the Road Research Laboratory shows conclusively that drink was a factor, I would not hesitate to bring proposals before the House.

Mr. Strauss: Did the Minister say that if the report shows drunken driving as a cause of the accidents over the Christmas period he will introduce legislation similar to that in operation in the Scandinavian countries?

Mr. Marples: If the Road Research Laboratory inquiry showed that drink was an important factor, and the power under the 1962 Act was insufficient, I would not hesitate to come forward with some proposal to the House.

Mr. Craddock: I thank the Minister for the coverage he has given this matter, but is he satisfied that the existing regulations are being observed? Is he aware that I can take him to Whitehall at 9.30 on any morning during the week, where he will see vehicles being driven at 55 m.p.h.? I have been a driver now for 30 years. If this kind of thing is allowed to take place on our roads, are we not bound to have many accidents?

Mr. Marples: The enforcement of the regulations is not a question for me, as Minister; it is really a question for the police.

Mr. Lubbock: Does not the Minister agree that this inquiry by the Road Research Laboratory will not be successful in establishing whether drink is an important factor in the cause of accidents over the Christmas period, because the only statistics available are the cases where prosecutions are brought, and the police do not automatically make a


record that someone has been drinking when they do not subsequently bring a prosecution?
Secondly, would the right hon. Gentleman agree that public opinion is strongly in favour of strengthening the law against drinking while driving? Has he had a chance to study the figures I sent to him, which show that the overwhelming majority of the people questioned in public opinion polls conducted in my constituency were in favour both of legislation along the Scandinavian lines and of imposing stiffer penalties for drunken driving?

Mr. Marples: As for the first part of the hon. Member's supplementary question, it is not true that the Road Research Laboratory will not have the actual evidence before it. It will have not only the police reports, but the coroners' reports and any medical reports there may be when it goes into the cause of deaths; therefore, it will have a complete report. I have no doubt that the Laboratory's report will be better than the previous one, because the work has been started earlier and the staff there have already had experience of the work. With regard to the "Gallup poll" that the hon. Member conducted in his own constituency, I did not think the sample adequate, nor did I think the questions quite fair.

Mr. John Hall: Would not my right hon. Friend agree that, despite the very stringent control in Sweden of drivers who have taken alcohol in extreme, nevertheless the numbers of deaths per 10,000 of population in Sweden are almost twice as many as those in this country?

Mr. Marples: I think that I will confine my attention to this country, if my hon. Friend will permit me.

Mr. Blackburn: Does the right hon. Gentleman think that another inquiry is necessary? Is he aware that many of us believe that he himself knows a good many of the answers, and that there are 629 hon. Members prepared to tell him any that he does not know?

Mr. Marples: Unfortunately, there are 625 hon. Members, not 629, I think, and all of them have differing views.

Mrs. Slater: Does not the Minister think that, while awaiting this report,

he should take the opportunity of consulting the Home Secretary on the great discrepancy there is between the fines imposed in different parts of the country for the same kind of accident? Is he aware that it is not only a question of the deaths of people, but of people who are injured, possibly for life, or who will suffer for a very long time because of road accidents? Would he, therefore, consult the Home Office immediately?

Mr. Marples: I am in constant touch with my right hon. Friend the Home Secretary, and perhaps the hon. Lady will put a Question down to him.

TRANSPORT

Bus Services, London

Mr. Vane: asked the Minister of Transport whether he is aware of the increasing inconvenience to the users of public transport in central London from the less frequent running of many of the more popular buses, involving ever longer waits at bus stops; and whether he will issue a general direction to the London Transport Board to ensure that the services should be run with full consideration for the interests of the travelling public.

Vice-Admiral Hughes Hallett: We do not think this would be appropriate. Both we and the London Transport Board are aware of the difficult problems affecting its bus services at present. These are largely bound up with the board's manpower problems, which are relevant to the work of the Committee of Inquiry announced by my right hon. Friend the Minister of Labour on 20th November. The Committee is now busily engaged with its task. It presented an Interim Report in December.

Mr. Vane: Is my hon. and gallant Friend aware that the problem is much more serious than the Answer would seem to indicate? Since Lent is approaching, would it not be a good thing if my right hon. Friend persuaded some of his colleagues to deny themselves the use of official cars so that they might appreciate at first hand what other people have to contend with?

Mr. Mellish: Will the Minister confirm that while private motorists are using the roads in far greater numbers


than ever before, it is almost impossible for London Transport to arrive at any satisfactory schedule for the central part of London?

Vice-Admiral Hughes Hallett: We are aware of this point and that is why my right hon. Friend has taken so much action, not always popular in the first instance, to establish non-parking zones, one-way streets and so forth.

SHIPPING

Safety at Sea

Commander Kerans: asked the Minister of Transport if he will seek consultations with other Governments concerned to improve the safety arrangements in merchant ships operating from United Kingdom ports.

Vice-Admiral Hughes Hallett: International consultations about improvements in safety at sea are carried out continuously, under the ægis of the Intergovernmental Maritime Consultative Organisation.

Commander Kerans: Can my hon. and gallant Friend say whether the refit of the "Lakonia" at Southampton by Thorneycrofts was in all respects satisfactory in regard to safety installations and the warning system; and will he make every endeavour to conduct a full inquiry when the Greek Government have completed their inquiry?

Vice-Admiral Hughes Hallett: The latter part of my hon. and gallant Friend's supplementary question anticipates a later Question on the Order Paper. The first part, I think, anticipates the result of the inquiry.

Mr. Mellish: Our record in this is not very honourable, is it, since the Safety of Life at Sea Convention of 1960 has still not been implemented by this Government? Why not?

Vice-Admiral Hughes Hallett: It has not yet been implemented because legislation would be required to do so. As the hon. Gentleman will be aware, there is a Bill before the House now for that purpose.

Mr. Mellish: I can assure the hon. Gentlemon that the Opposition would be prepared to do anything they could

to help the Government get that legislation through, particularly on an important subject of this kind, which concerns safety at sea. The Government have had three years in which to implement this, so will we get this legislation quickly, perhaps in the next month or so?

Vice-Admiral Hughes Hallett: I appreciate the fact that the Opposition will co-operate with us when the Measure comes up for its Second Reading.

s.s. "Lakonia"

Mr. Strauss: asked the Minister of Transport whether, as most of the passengers on the "Lakonia" were British, he will seek the co-operation of the Greek maritime authorities for holding either a separate British or a joint Anglo-Greek inquiry into all aspects of the "Lakonia" disaster.

Vice-Admiral Hughes Hallett: There are no powers under which a joint inquiry could be held. It is accepted international practice that inquiries into wrecks are held by the nation in which the vessel was registered. The purpose of such inquiries is to determine the cause of the accident and, where necessary, to take disciplinary action against members of the crew.
Witnesses can be subpoenaed provided that they are within the jurisdiction of the court. If, therefore, a British inquiry were held it might be difficult to obtain the attendance of the Greek crew, neither would the court have any power to discipline them.
For these reasons, we consider it undesirable to hold a parallel inquiry, especially as we have no reason to doubt that the inquiry in Greece will be strictly and fairly conducted. We shall carefully consider the findings of the Greek court, after which my right hon. Friend will take any further action that may seem necessary.

Mr. Strauss: One appreciates the technical and legal difficulties involved in holding an inquiry in this country—that is, a separate inquiry—but, since practically all the passengers were British and since there is nation-wide concern about the disaster, would it not be reasonable to ask the Greek maritime authorities to allow technical officers


from his Department to participate in the inquiry being conducted in Athens and, if necessary, to cross-examine any witnesses who might be called before the inquiry?

Vice-Admiral Hughes Hallett: Arrangements are being made for the Ministry of Transport to be represented at the inquiry in Athens and also when statements are being taken from persons in this country.

Mr. Strauss: Will the hon. and gallant Gentleman answer my point? May we be assured that the concern and allegations of British passengers will be satisfied? Surely, it is reasonable that technical officers from the hon. and gallant Gentleman's Department should be allowed to participate in the inquiry in Athens? Since that seems such a reasonable request, will the Minister put it forward to the Greek maritime authorities?

Vice-Admiral Hughes Hallett: I take the right hon. Gentleman's point. The exact status of the representatives at the inquiry is now under discussion.

Mr. P. Williams: Can my hon. and gallant Friend confirm that anyone who is an interested party in this matter, or any passenger who was on the ship, is having facilities made available so that they can give evidence, in London or elsewhere? Does my hon. and gallant Friend's original reply mean that the Ministry has not closed its mind to the possibility of having a further inquiry, dependent on the consequences of the Greek inquiry?

Vice-Admiral Hughes Hallett: I can confirm my hon. Friend's first remarks. On his second point, after we have studied the results of the Greek inquiry we shall, naturally, consider holding an inquiry of our own.

Mr. Shinwell: Is it not very difficult to intervene in what is, after all, a major responsibility of a Greek shipping line when at the present time we have a quarrel with the United States Maritime Commission, which wishes to interfere in the affairs of British shipping companies? On the other hand, is it not possible, when a foreign line is carrying a very large complement of British passengers, to ensure that when a passenger

ship of this character is in a British port steps should be taken by the Ministry to ensure that the safety regulations are complied with?

Vice-Admiral Hughes Hallett: Yes, Sir. I very much agree with the remarks in the first part of the right hon. Gentleman's supplementary question. On the second part, we are bound by the Convention in this matter. I can confirm that a valid safety certificate was issued to the ship by the Greek Government and, in addition, as the right hon. Gentleman will no doubt have seen in the Press, our surveyors, by arrangement with the Greek line and other foreign lines, on occasions witness some of the tests of the lifeboats.

STEEL COMPANY OF WALES (DISPUTE)

Mr. K. Lewis: (by Private Notice) asked the Minister of Labour if he will make a statement with regard to the present dispute at the Steel Company of Wales.

The Minister of Labour (Mr. J. B. Godber): I had meetings on Monday with representatives of the company and of the Amalgamated Engineering Union which led to direct discussions between the two sides yesterday. As the House will know, these talks have not succeeded in breaking the deadlock. I have met representatives of the company again this morning and have invited the union to come to see me later today.

Mr. Lewis: Is my right hon. Friend aware that both sides of the House will, I am sure, appreciate the efforts he is making to get a solution to this dispute? Is he further aware that there is a strong feeling—in the country, at any rate—that the unions reallyought to agree that this matter should go to some form of arbitration—[Interruption.]—and that if they persist in not so agreeing because they believe, as has been stated, that arbitration will not go in their favour, what they are really saying is that they will have arbitration only if it will be favourable to them in the end? Will my right hon. Friend therefore press both sides in this dispute to get back to work—because this stoppage is causing disruption of both our home and our export trade—and, after they have got


back to work, allow a solution to be arrived at through some form of intervention by arbitration?

Mr. Godber: I am very anxious to get work started, but I think that it will be better if I do not comment now.

Mr. Gunter: Is the Minister aware—I am sure that he is—of the deep concern we all feel about the continuance of this very difficult and complicated dispute; and we wish him well in any efforts he makes today? I am very glad that he has continued the discussions during the day. I would only add, if I might, that it would be far better if hon. Members reflected a little before adding fuel to the fire.

Mr. Godber: I understand the hon. Gentleman's concern, which is general in the House. We all want to see this dispute brought to an end, but I really think that I had better not say any more.

Mr. J. Morris: May I thank the Minister for the part that he and his officers have so far played and press on him to continue to be personally interested in the matter, as he has been to date, and to ensure that there are no unjustifiable gaps to negotiations in the future and that no stone is left unturned to discover a solution to this dispute?
May I also ask him, on behalf of my colleagues and hon. Members in South Wales, to consult his right hon. Friend the Minister of Pensions and National Insurance about the widespread dissatisfaction that has so far arisen over many of the claims made by members of the A.E.U., the E.T.U. and other craft unions for unemployment benefit, particularly those employed by subcontractors, and also over claims for sickness benefits?

Mr. Godber: On the first part of the hon. Member's supplementary question, I will only say that I shall continue to do my best. On the second part, I will bring his comments to the notice of my right hon. Friend.

MONOPOLIES, MERGERS, RESTRICTIVE PRACTICES AND RESALE PRICE MAINTENANCE

The Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade (Mr. Edward Heath): With your permission, Mr. Speaker, and that of the House, I wish to make a statement on monopolies, mergers, restrictive practices and resale price maintenance.
The Government's policy of modernisation requires the promotion of the greatest possible efficiency in all sectors of the economy. Competitive trading conditions are an important element in helping to ensure that the nation's resources are efficiently used. Effective legislative measures in this field are essential if the nation is to enjoy the benefits of a high rate of economic growth and stable prices.
After a thorough review of the operation of the present legislation on monopolies and restrictive practices, the Government have reached the conclusion that this needs to be strengthened and extended.
The Government are satisfied that the "neutral" and uncommitted approach to monopoly on which present legislation is based remains fundamentally right and they do not propose to introduce into the law any presumption that monopoly or size are in themselves undesirable.
There are, nevertheless, occasions when the public and the Government need to know how a monopoly is operating in case intervention is necessary. The Government are satisfied that such inquiries are best carried out by an administrative tribunal like the present Monopolies Commission. But they have concluded that certain changes are necessary to make the Commission more effective, to give it greater authority, and to enable it to work more quickly.
With these objects in mind, the Government propose that the Commission should be strengthened and enlarged to enable it to work in groups. They also intend to enlarge their powers to implement the Commission's recommendations.
I wish to deal now with mergers. Many mergers are beneficial to the economy. They produce stronger units, economies of scale, better management,


better research and better sales organisation. The Government do not wish to place any obstacle in the way of such mergers, or of the great number whose effects on the economy are not significant.
There is, however, a small minority of mergers which may lead to monopoly conditions damaging to the public interest. The enlarged powers to be taken by the Government to ensure that the recommendations of the Commission can be implemented should cover this type of case.
I turn now to restrictive practices. It is clear that the Restrictive Trade Practices Act needs to be amended to deal with certain loopholes which are weakening its effectiveness, for example information agreements on prices. The Government propose to close these loopholes.
As it stands, the law makes no provision for monopolies and restrictive practices in the field of services. The Government think that this legislation should now be extended to enable them to refer what I might describe as commercial services to the Monopolies Commission. They would need to take powers to deal with any practices contrary to the public interest which the Commission's reports might reveal.
The Government intend to present a White Paper dealing in more detail with the proposals I have outlined.
I come finally to resale price maintenance. The Government believe that this practice is, in general, incompatible with their objective of encouraging effective competition and keeping down costs and prices. They have reached the conclusion that resale price maintenance should be presumed to be against the public interest unless in any particular case it is proved to the contrary to the satisfaction of a judicial tribunal. They therefore propose to introduce legislation this Session designed to bring the practice to an end subject to the right to apply for exemption to the judicial tribunal to which I have referred.
The Government believe that if this comprehensive series of proposals are put into effect the economy will be strengthened, to the benefit of all sections of the community, and to the

advantage of our competitive position in internal ional trade.

Mr. Jay: Is it not extraordinary that these very important proposals and legislation were not mentioned at all in the Queen's Speech only two months ago? Is it not even more extraordinary that it has taken twelve years of indecision by Ministers opposite and the Private Member's Bill of my hon. Friend the Member for Wednesbury (Mr. Stone-house) to get the Government to adopt proposals which we have been putting forward from this side of the House? Is the right hon. Gentleman aware that the Monopolies Commission worked in groups before 1956 and that this was altered by a Bill introduced bythe present Minister of Defence, that we opposed that alteration and that as a result of that Bill it has taken seven years to examine, for instance, the question of electric batteries for motor vehicles? Is the right hon. Gentleman also aware that Section 25 of the 1956 Act, which gives legal powers to manufacturers to enforce retail price maintenance was also introduced by the present Minister of Defence in the 1956 Act and that we on this side of the House voted against it?
Finally, is the right hon. Gentleman aware that his proposals to refer certain mergers to a public tribunal was suggested from this side of the House in the debate on I.C.I. and Courtaulds two years ago and was turned down by the Government? In view of this fantastic record, does the right hon. Gentleman not think that we ought to debate the whole of this matter very soon?

Mr. Heath: The right hon. Gentleman is quite wrong in thinking that there was nothing in the Queen's Speech in connection with these matters. The whole emphasis of the Queen's Speech was on the modernisation of the economy of Great Britain and making it more efficient and more effective. Nothing gives me greater pleasure than to know that we are to have the support of the right hon. Gentleman and his hon. and right hon. Friends in taking the measures necessary to modernise the economy in all respects. I am aware of the facts which the right hon. Gentleman has given It was perfectly well known at


the time why the change in the Commission was made by my right hon. Friend. [Hon. Members: "Why?"] Because its terms of reference were very largely previously connected with restrictive practices, which were taken out of the Commission's hands under the 1956 Act. At that time it was believed that it was not necessary for the Commission to continue in its previous state. Therefore, after further experience it is now our conclusion that it should be reorganised and dealt with in the way I have suggested. I believe that this is necessary. I am very glad to have the right hon. Gentleman's support for the measures we are taking on resale price maintenance.

Sir J. Vaughan-Morgan: Is my right hon. Friend aware that there are very many on these benches who will also welcome his proposals, particularly those of us who unsuccessfully in debates have nagged his predecessor to take just this action? Could my right hon. Friend say whether the protective action for resale price maintenance before the courts, which is outlined, will be able to be made effective before resale price maintenance is finally abolished?

Mr. Heath: I must ask my right hon. Friend to await the actual detailed proposals in the Bill. I do not think that he will expect me to go into detailed explanation now. It would be right obviously that those trades which are applying for exemption should maintain the exemption from abolition while the case is before the court.

Mr. Oram: On the last point made by the right hon. Gentleman, may I ask whether he recalls that the investigation by the Monopolies Commission into resale price maintenance on electrical accessories for vehicles took six years? Does the right hon. Gentleman's statement not mean that anyone who practises resale price maintenance will be able to continue all the time the tribunal is investigating the case and that this means in practice that the resale price maintenance will be going on while the Government are pretending to stop it?

Mr. Heath: No, Sir. The hon. Member is quite wrong. The Monopolies Commission's investigation into a limited

number of electrical goods in motor vehicles was an investigation into monopolistic tendencies, in the course of which the Commission came to certain conclusions about resale price maintenance. It was not an investigation into resale price maintenance as such. I do not believe that there is any comparison between the procedure I suggest here and what the hon. Member has been dicussing under the Monopolies Commission.

Mr. Emery: Does the right hon. Gentleman realise that there is great concern in industry about the way in which price leadership has been able to get round certain of the actions of the Monopolies Commission and that it will be most welcome that this is being dealt with? Will my right hon. Friend give an assurance that certain of the resale price maintenance field—and I speak particularly of the pharmaceutical field—will be thoroughly assured that their safeguards can be investigated before the action suggested by the Bill would take place?

Mr. Heath: I thank my hon. Friend for the first part of his remarks. As for the second part, that industry or trade will be in the same position as any other. It will have the safeguard under the Bill that if it applies for exemption it will retain powers of resale price maintenance until the matter is settled by the court.

Mr. Holt: Is the right hon. Gentleman aware that repentances are always welcome, even though they may be deathbed repentances? When can we expect to see the White Paper to which he has referred? If the right hon. Gentleman proposes to repeal Section 25 of the Restrictive Practices Act, will he also be making it illegal to enforce resale price maintenance at common law and bringing in Amendments to the Patents and Designs Act, 1949, which also gives protection to get round retail price maintenance?

Mr. Heath: The White Paper will be published in good time for a discussion in the House, if the hon. Gentleman so desires and can arrange it through the usual channels. Amendments to the 1956 and other Acts will be covered in the Bill and in the process resale price maintenance will become unlawful.

Dame Irene Ward: Is my hon. Friend aware that I think that he assumes too much in the way in which he has put all this to the House? Is he aware that without any guarantees about reduction of prices over a very wide field I have no intention of supporting throwing a lot of people to the wolves for pie in the sky?

Mr. Heath: I am not an authority on my hon. Friend's pie in the sky, but I would say that there is absolutely no justification for talking in terms of throwing people to the wolves. The proposals which I have put forward contain very full safeguards indeed, which I have explained to the House and which will be set out in the legislation which the House will then have the opportunity of debating. Perhaps I might say to my hon. Friend that there are very many small shopkeepers, as I think she would describe them, who are engaged in trades in which resale price maintenance is not practised and who carry on a very successful and effective living. There are many small shopkeepers engaged in trade in groceries, in which resale price maintenance has now broken down, who are carrying on a very successful, prosperous and efficient living. I therefore hope that on mature reflection she will withdraw any accusation of the kind which she made.

Hon. Members: Withdraw.

Dame Irene Ward: Why should I?

Mr. Heath: Perhaps I might tell my hon. Friend privately.

Mr. Wilson: Is the right hon. Gentleman aware that there is fairly general understanding that the splits on this matter are not confined to his back benches? We understand that his Front Bench is similarly split. Since no doubt the right hon. Gentlemen has studied the debate of 24th February, 1955, in which most of the proposals mentioned this afternoon were put forward from this Box, will he accept our congratulations on his speedy conversion to those ideas of nine years ago, and, indeed, to the points which we put subsequently on the 1956 Act? Secondly, will he tell us what he now thinks was wrong with the changes made by his predecessor which involved the Monopolies Com-

mission in nearly seven years in reporting on the batteries case? Something must have been wrong somewhere. Will he tell us why his Department took nearly twelve months to publish that report once it was available? Finally, will he tell us the prospective date for the White Paper and for the Bill to which he referred?

Mr. Heath: I cannot at this moment give the right hon. Gentlemen the exact date for publication of the White Paper and the Bill,but it will be comparatively soon, obviously. This will give the House the opportunity of the discussion which it wants. The right hon. Gentleman referred to the points made in the debate in February. If he reads my statement carefully, and if the right hon. Member for Battersea, North (Mr. Jay) reads it, they will find that he has misunderstood part of it dealing with mergers and monopolies. I therefore suggest that he await the White Paper and that we discuss it in detail. The examination of the electrical goods for motor vehicles was very detailed and very complex, as he can tell from the size and length of the report. Nevertheless, there has been criticism for some time, not only since 1956, of the Monopolies Commission for the length of time which it took and also sometimes for the immense detail into which it went in comparison with the task which was required of it. This has been a general problem to which we have had to address our minds.

Mr. Wilson: After the eleven months which his own Department took to read and publish the report, will he tell us whether he intends to introduce forthwith a "cease and desist" order in respect of points affecting the public interest or which the Monopolies Commission reported? Will he take powers under the Act or shall we have further procrastination until finally we have a General Election and can settle these things?

Mr. Heath: There will be no procrastination and delay of action on this report. I shall make a separate statement about it.

Several Hon. Members: rose—

Mr. Speaker: Order. We cannot debate this matter now.

BALLOT FOR NOTICES OF MOTIONS

Road Accidents

Sir H. Harrison: I beg to give notice that on Friday, 24th January, I shall call attention to the serious loss of life and limb on our public roads; and move a resolution.

Tariffs

Mr. Proudfoot: I beg to give notice that on Friday, 24th January, I shall call attention to the need to lower tariffs; and move a resolution.

Machinery of Government

Mr. John Page: I beg to give notice that on Friday, 24th January, I shall draw attention to the machinery of government; and move a resolution.

BILL PRESENTED

FAMILY ALLOWANCES AND NATIONAL INSURANCE

Bill to extend the meaning of the word "child" in the Family Allowances Acts, the National Insurance Acts and the National Insurance (Industrial Injuries) Acts, to increase widowed mother's allowance and certain other benefits under the National Insurance Acts and the National Insurance (Industrial Injuries) Acts paid in respect of or by reference to children, to require the disregard of part of any such benefit in arriving at the amount of a national assistance grant, and for certain other purposes, and to relax the earnings rules relating to widow's benefit and retirement pensions, and for connected purposes; presented by Mr. Wood; supported by the Prime Minister, Mr. Noble, Sir E. Boyle, Mrs. Thatcher, and Lieut.-Commander Maydon; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 60.]

SHIPBUILDING CREDIT BILL

Order for Second Reading read.

3.57 p.m.

The Minister of Transport (Mr. Ernest Marples): I beg to move, That the Bill be now read a Second Time.
We have two Bills before the House today, and I will try to be as brief as possible in order to give hon. Members on both sides of the House a chance to participate in the debate. I will first explain the purpose of the Bill. It is to give me as Minister specific powers to lend money on favourable terms to United Kingdom shipowners to finance the building of ships in United Kingdom yards. There is a stated limit to the sums which I can lend and also a time limit. The Bill flows from the Shipbuilding Credit Scheme which was announced on the 29th May, 1963, and in fact the scheme has been operating since that date. This legislation gives me specific authority to make loans under that scheme.
Why did the Government decide on this particular scheme? Because of the increasing difficulties our shipbuilders faced. There were two reasons for those difficulties. The first was the enormous growth of shipbuilding capacity throughout the world, and the second was the long depression into which world shipping fell six years ago. At the end of 1958, our shipbuilding industry had on hand two years' orders for merchant ships on which work had not begun. At the beginning of 1963 there was only about six months' work. Orders were very unevenly spread and yards were beginning to close down.
Clearly something had to be done to tide the industry over this crisis, and one method widely canvassed at the time was scrap-and-build. There was a scrap-and-build scheme before the war, but precedents can be good or bad, and I believe that that precedent was definitely bad. One reason why we did not want scrap-and-build was that it involves an outright general subsidy, and this is not desirable. For a long time we in this country have been saying that we deplore the payment of subsidies in some other countries. How could we continue our efforts to stop their


subsidies if we ourselves started paying them? Some people argued that the purpose of the scrapping element was either to promote new building or to counter criticism that subsidising building without scrapping would increase the world surplus of tonnage and thereby prolong the shipping depression. But scrapping on a national basis could not have affected the world surplus, at any rate not enough to bring about an increase in orders for new ships. In any case, the British merchant fleet was already reasonably modern. The Government therefore decided to provide a sharp, once-and-for-all stimulus to building by offering long-term loans to owners at Government lending rates.
I now come to the form of the scheme. First, it is restricted to United Kingdom owners. We decided against lending money to foreign owners, because that might well have given a new impulse to the international credit race and in any case foreign owners already enjoy special export credit facilities if they build here. Our purpose was to stimulate orders by United Kingdom owners who are such very important customers for the United Kingdom shipbuilding industry. Secondly, we excluded fishing vessels, because the owners of fishing vessels are eligible for help under other schemes which come within the responsibilities of my right hon. Friend the Minister of Agriculture, Fisheries and Food. Thirdly, we excluded ships of less than 100 gross tons. This was because the demand for small craft has been and still is quite high.

Mr. E. Feruyhough: In restricting loans to United Kingdom owners, has the right hon. Gentleman also specified that the orders must be dealt with in British shipyards?

Mr. Marples: Yes.

I now turn to the way in which we handled applications for the loans. To get expert advice, we set up the Shipbuilding Credit Advisory Committee, under the chairmanship of Lord Piercy, to advise me as Minister. I am grateful to Lord Piercy and his colleagues for their very skilled and penetrating advice. The Committee advised on the merits of each application for a loan, the credit-worthiness of the applicants and the security available. We for our part had

to strike a very careful balance between the promotional requirements of the scheme and the need to protect public money.
The promotional value of the scheme has been oar ability to offer loans of up to 80 per cent. for 10 years at Government lending rates of interest. On the other side, the Advisory Committee took into account the general reputation of the prospective borrower, his managerial efficiency, his past record of earnings and the likelihood of similar future standards of performance. The basic security which we have asked for has been a mortgage on the ship to be built and in some cases an additional security, usually a lien on another ship, a guarantee from a parent company, or a promise of employment for the ship, such as a long charter.
We also made sure in each case that the ship would be built straight away. The reason for this was that our aim has been to get work for the shipyards now. Apart from the new Cunarder, we were not interested in projects to begin in 1965 or later. The problem was immediate and required an immediate solution. It is particularly appropriate that one of the first ships to be built under the scheme is being launched today in Sunderland. I shall expect tributes of gratitude from my hon. Friend this Member for Sunderland, South (Mr. P. Williams) in due course.
All the provisions which I have described are covered by Clause 1. Clause 2 deals with finance.

Dr. J. Dickson Mabon: The Minister said—and it is important that this should be explained on Second Reading—that he was not interested in what the position would be in 1965 and that that was the reason for the limitation. Would he explain his prognosis of the industry in 1965 and 1966 which enabled him to say that?

Mr. Marples: I am coming to that later. What I tried to convey was that the shipbuilding industry was facing a crisis of a sudden drop of orders and of unemployment in the shipbuilding areas. The first thing to do was to get immediate orders projected into the shipbuilding industry so that ships could be built to provide employment and the yards made busy and then there could


be a survey of what remedial measures could be taken to meet the present fierce competition. The first thing to be done was to get orders. I will later deal with the position in 1965. The purpose of the Bill was to provide immediate and not long-term relief for the shipyards. That is the point I was trying to make.
Clause 2 covers the financial arrangements. The money for the loans will come from the Consolidated Fund. This is normal. Up to now we have used the provisional authority of the Appropriation Act. This arrangement will enable me to remunerate the Ship Mortgage Finance Company which provided valuable and expert service to Lord Piercy's Advisory Committee. This arrangement also gave me authority to enter into commitments with borrowers, though no loans will actually be made under its authority. All the loans will be made under the authority of the Bill when it becomes an Act.
I should now like to refer to the progress of the scheme. The shipping and shipbuilding industries have welcomed it. Last May, I said that initially £30 million would be made available, but applications soon exceeded that amount and in July the amount was increased to £60 million. In October, I announced the loan for the new Cunarder and an increase in the money available to £75 million. Applications have been received for all this. There is still some work to do on the later applications, but very shortly the last loan offer will have been made and accepted. This will provide the shipbuilding industry with about 850,000 gross tons of new building. So much for the volume of orders.
I want now to spend a short time discussing the scheme's effect on the shipping industry and to discuss the types of tonnage ordered. This is most interesting. I cannot yet give absolutely accurate figures of the result of the scheme, but, apart from the new Cunarder, which is a special case, the most interesting feature of the tonnage ordered is the predominance of bulk carriers. These amount to more than 500,000 gross tons. Tankers account for another 150,000 gross tons and cargo liners, which are rather more complex and expensive, for nearly 120,000 gross

tons. The rest is made up of many types—small coastal and short sea vessels, tugs, dredgers and so on—adding up to about 22,000 tons.
Although the scheme was intended primarily to help the shipbuilding industry—giving loans to ship owners was merely a method of helping ship builders; in my view, the best method—it also helped shipowners to maintain the modernisation of their fleets. Successful applicants have been free to place their orders with the builders of their choice, which is important, for it is no part of my job to tell shipowners where to place their orders. Some builders have done much better than others, which is only to be expected because they are more modernised and have better capacity, better productivity and so on. However, it is satisfactory that the share of the total tonnage under the scheme gained by the principal shipbuilding areas is roughly in proportion to their share of the industry's total capacity.
I should now like to refer to the scheme's effect and likely effect on the shipyards over the next few years. In June, 1963, that is, before any work had started on credit scheme orders, about 1 million gross tons of merchant ships were under construction and about 53,000people were employed. If the rate of ordering of recent years had continued, it seemed more than likely that employment on merchant work would fall to about 44,000 by March, 1964, and to below 30,000 a year later. That would have been a tremendous drop in the number employed.
We think that by March this year work will have started on more than three-quarters of the tonnage financed under the scheme and something approaching 1,500,000 tons of merchant shipping altogether will then be under construction in our yards. This level ought at least to be maintained for the remainder of this year and into next and employment on new building should rise quite rapidly as well, I would think to around 70,000 by the spring, and should be at least maintained at that level for the following 12 months. I want to be fair about this and not claim the whole credit. Since the credit scheme was introduced, there has been a slight improvement in general trading


conditions for shipowners all over the world. The improvement has been with us for too short a time to be sure that it will continue, but there are already signs that it is leading to some revival in the rate of ordering of new ships, and I have made some allowance for this in the estimates which I have just given.

Mr. Paul Williams: I should like to check my right hon. Friend's figures. Did he say that 53,000 people were employed in the industry before the scheme and that by March 1964, as a consequence of the scheme, the number will have risen to 70,000?

Mr. Marples: Yes, those two figures are correct. It would have gone down to much below 53,000 if we had not introduced the scheme, but now it should be 70,000 by the spring, which is very much more than before the scheme was introduced. I cannot predict how things will go after about the spring of 1965—this is the point made by the hon. Member for Greenock (Dr. Dickson Mabon). That is as far as we can get with firm prospects at the moment. It all depends on the prospects as the shipowners see them from now on, because the prosperity of our shipbuilding industry is inevitably tied up with our shipowning industry.
There is one thing of which I am certain. If it had not been for the shipbuilding credit scheme, the fall in shipyard employment would have continued much further. As it is, the tide has been turned and the industry has been given a breathing space. Some people have wondered why no more loans are to be offered to shipowners. I think that they have misunderstood the purpose of the whole scheme. It has been so successful that, together with the improvement I have mentioned in what I might call the natural rate of ordering, the level of activity in our shipyards will soon be at a level greater than the industry may be able to sustain in the long term.
It is no good for the nation, or for the shipbuilding industry itself, to prolong artifically an excess of capacity by continuing a scheme like this for too long. One of the biggest problems the industry faces is to reshape itself so that its production units can keep their order

books reasonably full. Only then will there be real security of employment, and, quite frankly, I believe that that is one of the keys to the future of this industry.

Mr. Bruce Millan: Can the right hon. Gentleman be a little more specific about that and say what he would aim at in terms of annual tonnage for the industry?

Mr. Marples: I am not going to be more specific at this stage, because I cannot predict further than the spring of 1965. All I can say is that we do not want an industry which has a tremendous volume of orders one year and none the next. We must have continuity, and this industry will have to be reshaped so that all its production units can keep their order books reasonably full. The purpose of the scheme was to provide a breathing space for the industry to take time to perform that very task. That is a job for the industry. It is not a job for me. If it asks for my assistance, I shall do what I can to help, but it is a private enterprise industry, and it is up to the industry to see what it can do.
Finally, I have a word or two to say about the future of the industry. I would be misleading the House if I gave the impression that the Government thought that the considerable difficulties which the shipbuilding industry has had to face in the past two years, and which it is facing now, are over. They are not. A great deal will depend on how the improvement in shipping prospects continues. It is clear that non-credit scheme orders from United Kingdom owners came in at a better rate in the year as a whole than at any time since the depression set in. The improvement began in the third quarter of the year, and was more marked in the last quarter. Export orders were higher in 1963 than for years past, and I think that the industry should be congratulated on that. There were very valuable contracts among them.
Competition between yards in this country, and between home and overseas yards as well, is likely to remain very fierce. For large tankers the pace has undoubtedly been set by Japan. She has emerged as one of the most powerful shipbuilding forces in the world for


tankers, and even Swedish builders, who are formidable competitors any way, are having to cut prices to the bone to compete with Japan.
In those circumstances, our builders are likely to have to go on quoting very keen prices, and this means that they must do everything they can to cut their costs. I do not for a moment suppose that there is any easy solution or any short cut. I think that the builders must examine all the elements of the cost of a ship and reduce them all as far as they possibly can. This may involve a radical reshaping and concentration of the yards themselves, and, just as important—or perhaps even more important—of the shops where the engines are built. It means finding ways of cutting costs of the materials and equipment which go to make ships. This will not be easy, for these costs are largely outside the builder's direct control, but all the same, having studied and lived with this problem for more than four years, I believe that there are possibilities. This may involve the owners being readier to accept the builders' proposals than they have been in the past, and there may be other ways in which owners and builders can collaborate in this. We have the Shipping Advisory Panel with a lot of distinguished shipowners on it, and I hope to get advice and guidance from the panel as to what assistance we in the Ministry can give to bring about the desired state of affairs.
I come next to the labour situation. This is a subject with which employers and unions have been wrestling for over two years in a working party under a Ministry of Labour chairman. I make no secret of the fact that progress has been disappointing and distressingly slow. I hope that with the recent settlement on pay and hours it will be possible for both sides to get somewhere. I am sure that it is as much in the interests of the men themselves as of the management that this should happen. Indeed, it must happen if this industry is to be healthy and vigorous in the years to come.
With this competition from Japan, from Sweden, from Germany and from Holland, we cannot afford any inefficiency, and what is frustrating and distressing is that when one goes round

the shipyards one sees men who individually are highly skilled craftsmen, but yet, for some reason or other, we cannot get this harmonious relationship whereby we can get flexibility of labour. I beg the men and the employers to get together on this point if they wish to face and beat the competition from abroad.
But all this is for the industry itself to tackle. It is not for the Government to tell the industry how to run its business. If the industry asks for our assistance, we shall do what we can to help. What we have done is to secure a breathing space at a time when fortunes had been brought dangerously low. This has enabled the industry itself to look up from its immediate preoccupation with survival and get employment going—in fact to increase it—and get ready for the future. I am sure that the shipbuilders recognise this, and that being so the shipbuilding credit scheme has served its purpose.
I know that many hon. Members wish to take part in the debate, and I have deliberately kept my contribution short because we have a short debate. I should like the shipbuilding industry, both employers and employees, to know that in this Bill the Government made a sincere effort, which, as it happened, was successful, although doubts were expressed when I made the first announcement of it in this House. I hope that the industry will use this breathing space to get down to the question of the right size and shape of the industry, and to the question of improving its efficiency. If it does that, we in the Government will play our part.
Many of the Bills which I introduce are controversial. This is one of the shortest and simplest of the Bills that I have brought in, and I think that it is one that will not arouse a great deal of controversy.

Dr. Mabon: That is what the right hon. Gentleman thinks!

Mr. Marples: I am sorry, but hope springs eternal. I always try to be non-controversial, but from time to time things happen which do not allow me to be that. I was hoping that all hon. Members would vote for the Bill; that they would think it was a good scheme, and would give me advice and guidance,


and at the same time perhaps give some to the shipbuilding industry. With those few words, I hope that the House will give the Bill a Second Reading.

4.18 p.m.

Mr. Frederick Willey: I am sure that on reflection the right hon. Gentleman will be bitterly disappointed with his speech. He has given us a few platitudes. He said that he had lived with this problem for four years. That being so, and knowing how desperately important this is, we had expected something constructive.
Having said that, I at once take advantage of the rare opportunity which I am afforded on this occasion of welcoming the Bill; of welcoming something that the right hon. Gentleman has done. In fact, I have every reason to do that, because when we last discussed shipbuilding in 1962 I suggested it. In that debate I said, first, that the yards had a year's work ahead and that within that period something would have to be done. Secondly, I called attention to the low rate of orders from British owners and said that it was about half the normal replacement rate. Thirdly, I said that I was convinced that the position was not unrelated to credits. Fourthly, I called attention to the advice of Lord Piercy and said that he had pointed out that the competition from foreign yards did not seem to be due to prices or delivery dates but to the financial facilities they provided.
Fifthly, I then welcomed the action which the Government had taken to persuade foreign owners to put in orders to British yards, by giving them facilities comparable with those which they enjoyed abroad, but I said that this aggravated the position of the British owner. Sixthly, I said that this was important to British shipyards, because 80 per cent. of the orders coming to them came from British owners. Seventhly, I said that in this situation British owners would refrain from putting in orders to British yards, and I concluded by pointing out that in the very sensitive and difficult twelve months that lay ahead of us British shipowners might continue to hold back, at a time when, in the national interest, it was necessary to encourage the placing of more orders.
The right hon. Gentleman then rejected all those propositions, and that argument. Now, very late in the day, he has taken action. When I say "late in the day", he should not smile, because the shipbuilding districts went through a desperate winter in 1962–63. We finished 1962 with completions standing at a figure 350,000 tons lower than the year before. We have not got the figure for 1963, but we believe that it may be just below 1 million tons. In other words, the level of output of British shipyards has been drastically changed in the past eighteen months, through the inaction of the right hon. Gentleman. Action could have been taken eighteen months ago when we called for it.
Nevertheless, in this changed situation we welcome the aid that is afforded. I am sure that no one will make any point about this being retrospective legislation. Once the announcement was made it had to be implemented, or the position would have deteriorated, as the right hon. Gentleman said. But we expected far more from him today, because as he has said, this Bill offers only a breathing space. We feel that the right hon. Gentleman should have been more encouraging than merely to say that this is a once-for-all provision, without any reference to what is to be done in the breathing space.
The right hon. Gentleman said that this Bill will provide temporary relief. I agree that it will provide sufficient relief to see the Government over the General Election, whether it comes early or late in the year, but it will do little more. He said that it will provide temporary relief to a hard-pressed industry, but his reference to a "hard pressed industry" is something of an under-statement. Since 1951, when his Government took office, there has been a catastrophic change in two of Britain's greatest industries—shipping and shipbuilding. When the Government took office the British mercantile fleet represented 20 per cent. of the world's fleet; it now represents only 15 per cent. The position has been entirely changed as a result of the development of flags of convenience, flag discrimination and all the other discriminatory practices.
The Minister has said that shipbuilding depends on shipping. We have appealed to him to produce enabling


legislation, not for the purpose of retaliation but to negotiate on a level with those against whose actions we are protesting. He has said nothing about this. I acknowledge the action that the Minister has taken, but I also recognise that the shipping industry has called upon him to take further and firmer action. He has said nothing at all about that, and until he does so there will be disquiet in the industry.
I now turn to the shipbuilding industry. When his Government took office we were the greatest shipbuilding country in the world. We have lost that position overwhelmingly to Japan. When his Government took office British yards provided 37 per cent. of the world's output. In 1962, the figure dropped to 13 per cent., and in the past year it will have undoubtedly dropped lower still. It dropped in 1962—and this is the important thing—when there was no crisis in world shipbuilding. World shipbuilding output increased in that year by 2½ million tons. That was when he rejected our appeal to provide credit facilities which could have tided us over that difficult year. I believe that he has deliberately reduced the level of output of British shipbuilding in the past eighteen months.
If we remember the situation that existed before this Government took office we must regard the situation which obtained until recently as almost inconceivable—a situation in which the United Kingdom became the largest importer of new shipping in the world. Fortunately, that situation does not obtain today, but we are still fourth among importers of new shipping. Over 300,000 tons of our shipping is being constructed abroad for British owners and we now have 64,000 fewer workers in the industry than when the Conservatives came into office in 1951. In all our shipbuilding areas there is heavy unemployment, and the hon. Member for Sunderland, South (Mr. P. Williams) and I know that our town is not even recognised as a growth area.
In these circumstances we naturally accept the Bill, and what has been done in anticipation of its provisions, as a breathing space, but we want to know what will be done during the breathing space. All that the right hon. Gentle-

man has mentioned is contraction. If he mentions contraction he must be more specific. He cannot go on talking continually about contraction and then expect a positive response from the industry.
This is particularly important, for two reasons. During the summer Mr. Westphal, the chairman of the Association of German Shipyards, said that discussions were proceeding successfully for a scheme for the reduction of shipbuilding capacity. He said that these discussions had proceeded well in Europe, but that their success would depend upon the co-operation or non-co-operation of the Japanese. The right hon. Gentleman said nothing about this. I should like to know what is happening. If there are any cartel discussions about the reduction of an industry such as British shipbuilding we want to know about it.
We know that the Minister's Department produced a scheme for the contraction of British shipbuilding, and we also know that it did not receive Cabinet approval. I believe that it was a two-phased scheme. This is relevant in present circumstances, because the second phase was to discourage orders being given to inefficient yards and, after a period, to close those yards. Only after that was consideration to be given to the question of aid to efficient yards.

Mr. Marples: The suggestion that a scheme was proposed by my Department and was rejected by the Cabinet is a complete figment of the hon. Member's imagination.

Mr. Willey: I will give the right hon. Gentleman the source of my information after the debate. However, I am partly obliged to him for saying this. I would like him to tell us—if he contradicts what I say—what was proposed by his Department.Is it a fact, then, that it has proposed nothing at all? I was being more generous to his Department. I understood that it had prepared a plan, but that it had not obtained Cabinet approval. In a sense, it is more disturbing if we have got no plan than if we have got a specific plan, because time after time the right hon. Gentleman has taken the easy course by saying that we should have more flexibility in the industry. He asks us


to consider what has been accomplished in Sweden. There is a big difference between Sweden and this country. In Sweden the worker has security. If we want flexibility in British shipbuilding we must create an established labour force, and for that we need a plan.
It may be that this factor is exaggerated, but if we are to obtain the necessary response it is the right hon. Gentleman's responsibility to see that a fairly clear idea of the future of British shipbuilding is presented, and that we all know what its capacity is envisaged to be. Once we have that information we can obtain security for the workers, and then the greater flexibility which he wants.
It is also necessary to do something about providing alternative work. I have already referred to my constituency. We have had heavy unemployment in our shipyards, but in the Government White Paper on the North-East it is made clear that Sunderland is not in a growth area. This does not provide the prospect of alternative work, and if there is contraction we must have this in order to create this sense of security.
There is the question of bringing alternative work into the yards. This is not only a question of providing alternative employment. It is also a question of costs. Today I am in a welcoming mood. I pay credit to the Minister of Public Building and Works for what he has done. But it is minimal. It is a beginning. A few weeks ago the right hon. Gentleman said that he had set up three inquiry centres and that there had been 30 inquiries from shipbuilders. As one might expect, a shipbuilder in the North-East has set the pace. A subsidiary company has been set up in co-operation with the builders. This is only a start and more will have to be done.
The Japanese are giving a lead. They are not complaining of a lack of orders. They are using their plant for dual purposes, for the construction of machinery, bridges and other things. This is a factor which has to be brought into our yards if we are deliberately to set out, as is conceded by everyone, to try to bring down building costs. These are the sort of things about which I expected to hear from the Minister. When he made a

statement in May of last year, I mentioned two things. One was the type of ships—the Minister has referred to that—and the nature of the orders put in, and the other was the general reorganisation of construction.
Something is being done about the type of the ships. We talked about that years ago. We have the building of standard ships and batch production, and credit is due to firms like Swan and Hunter for what they have done. But this is something which should be pursued more vigorously. Reorganisation of construction is cardinal. Sir William Lithgow, who has set a good example himself, said that success in shipbuilding lies in management, and that is very true. We need a better lead for management planning particularly at the most difficult stage of fitting out. The Patton Report, to which the right hon. Gentleman did not refer, said that there was little experience of effective outfit planning in this country. I give credit to what the B.S.R.A. is doing at Fairfields. But more ought to be done. The position regarding shipbuilding is so difficult and desperate that it is not good enough to say that something is being done. It is a question of whether we are doing something with sufficient vigour and energy.
It is not only a question of the organisation of yards and management planning—the right hon. Gentleman touched on this—but also it is a question of looking forward and thinking about the operational costs of a ship. Something is being done about that. But it is not enough, and it is being done very late. We are far behind countries like Japan. More research is required into the efficiency of loading and unloading and getting a shorter turn-round time, and into the carrying capacity of ships. I mentioned operational costs. The Japanese have set the pace. We have heard their claims about the automatic freighter. If the right hon. Gentleman has been faced with this problem for four years it is no use now shrugging off responsibility. It should be his purpose to promote and encourage the necessary research and development. It was alleged the other day that a British builder using British components would add 7 per cent. to the cost of a ship. We must pay more attention to the com-


ponents and design and to their efficiency and cost.
The right hon. Gentleman mentioned the engine sector, the Achilles heel of British shipbuilding production. But he said little about it. The other day the Minister for Science suggested that we ought to have a development contract to speed up the work on an all-British high-powered marine diesel. The right hon. Gentleman did not mention that. Did not he know about it? Is there no co-operation and co-ordination? In debates over the last ten years we have discussed development contracts of this nature. We ought not to be dependent on the Swiss and the Danes. That is something about which the Government cannot abrogate responsibility. The right hon. Gentleman has travelled abroad and ought to appreciate that in countries like Japan, France, West Germany and Sweden there is public interest in a great national industry.
The right hon. Gentleman has not referred to nuclear propulsion. This is still in an unholy muddle. The Minister loves undertaking personal responsibility, and so I invite him to take personal responsibility for seeing that this matter is put right. The Atomic Energy Authority and the industry are not working smoothly together. It is not a case of being out of sight of the development made by Russia and America. We now know that we are a long way behind West Germany. The West Germans will have their nuclear propelled shipping operating by 1967 at the latest. It is not only a question of Russia, the United States, Germany and Japan, but also other European countries.
So far as one can see Europe is going nuclear in respect of shipbuilding. There are developments in Norway, Italy, Denmark, Sweden, France and the Netherlands. Yet we are still held back because of indecision and an inability to place responsibility anywhere. That is why I invite the right hon. Gentleman to accept responsibility. Let us have someone who is responsible. In shipbuilding and shipping it has always been true that the means of propulsion are all-important. If there is a chance of shipping going nuclear, as it is obvious

that many of our competing shipbuilding countries believe, we must always be in the van in order to retain our place. These are things about which we expected to hear from the right hon. Gentleman. They are the things which determine the future of the industry and the position it will occupy after the General Election.
The right hon. Gentleman has talked about credit. This immediately accentuates the importance of price. I have been talking about matters which affect the efficiency of the industry and therefore affect price. There is one thing that affects price more than anything else and that is steel. It is the most expensive material item in shipbuilding. My hon. Friend the Member for Edmonton (Mr. Albu) raised the question of steel in our last debate. Prejudicial practices regarding the steel industry affect the shipbuilding industry, and there is reference to that in the Patton Report. I should like to know how effectively these things have been straightened out.
More important is the price of steel. Mr. Allan J. Marr, president of the Shipbuilding Conference and the head of one of the yards in my constituency, said that some foreign countries are able to buy steel at prices substantially less than those in Britain and the difference has been as much as £7 a ton. The right hon. Gentleman spoke about Sweden. We know that the Swedes are getting cheaper steel from the Poles. This represents a dramatic change in the competitive position of British shipbuilding. A great advantage which British shipbuilders have always had was the benefit of cheaper steel than could be obtained by foreign yards with whom they were competing. There was a time when the price differential was as much as £20 in our favour against the Swedish shipyards.
We are approaching a General Election and the right hon. Gentleman may as well face the fact that this is a political question. The British shipbuilding industry has been the victim of the denationalisation of the steel industry. As the Minister will know, I have said this repeatedly in my constituency and it has been raised during election after election. This is a fact. The Government denationalised the


steel industry and the increasing price of steel was an inevitable consequence. What was once the great advantage of the British shipbuilders has been translated into a disadvantage. Our steel industry is in production units smaller than in any competing steel industry in the world. It has been broken up and this is reflected in the price. We have had this unfortunate period of redundancy in the steel industry where the smallest unit carrying the heaviest redundancy has determined the price of steel. Shipyards have suffered. One of the most important factors when we are thinking of the costs of ships built in British shipyards has been the rapid increase in the price of steel.
If we turn to the industry and what can be done in this breathing space, we have had nothing from the Minister in either fields. He has complained that we are competing with subsidised production but has not mentioned anything that he has done to ensure that we compete on level terms. He said that because there is unequal competition he cannot take any action about "scrap and build" because it would mean subsidy here.
What about Soviet orders? Massive orders have been placed in Japan by the Soviets. We have had the satellite countries—Roumania, Czechoslovakia, East Germany and Bulgaria—placing orders. But none of them seems to be attracted to this country. Perhaps the Parliamentary Secretary will deal with this. What the Minister cannot do is to ride two horses—say that he cannot take any action which might involve a subsidy because foreign shipbuilders are subsidised and at the same time take no action about subsidisation by foreign countries.
With regard to "scrap and build", the situation facing us is depressing. There have been a long series of discussions between the Minister and interested parties. The Minister has discussed the subject with shipping and shipbuilding interests and with the Trades Union Congress. The Trades Union Congress suggested that we should stabilise shipping at 20 million tons and accept a 5 per cent. replacement rate and ensure this by extended credits. If the Minister rejects these proposals, it is for him to produce others. I agree with him that

the British mercantile fleet is a modern one, but 2¼ million tons are more than twenty years of age. There is the ridiculous position of selling the old tonnage abroad and further depressing freight rates.
We know that the French will be introducing a "scrap and build" scheme this year. If the right hon. Gentleman rejects all he proposals made to him, it is up to him to make his own suggestions. We cannot afford to say very late in the day after shipbuilding has been very seriously run down that we have given it a breathing space. What we want to know is what lead the Government are giving during this relatively short space of time which will in any case be interrupted by a General Election. The shipbuilders are suggesting that the scheme has been cut off prematurely and should have been continued. The right hon. Gentleman has aggravated the position by shrugging his shoulders and saying "It is a once-and-for-all. I have no further responsibility."
It is in this sense that the Minister's speech is disappointing. It will be a serious matter for shipbuilding if after the General Election the right hon. Gentleman still occupies his present office. I hope that for both these great industries—shipping and shipbuilding—the General Election will ensure one thing if notaing else, that the right hon. Gentleman, who has failed to face up to his responsibilities, will no longer be responsible for them.

4.44 p.m.

Colonel Sir Leonard Ropner: It seems to me that if the Minister of Transport had dealt even shortly with all the subjects which the hon. Member for Sunderland, North (Mr. Willey) asked him to deal, we should have been here all night, unless, as I think highly probable, Mr. Speaker had ruled my right hon. Friend out of order
I ought to proclaim my personal interest in the Bill. I am not a shipbuilder but I am a shipowner, and in that capacity I have made use of the shipbuilding credit scheme, the main purpose of which, as my right hon. Friend has said, was to bring more employment to the shipbuilding industry.
In the early weeks of last year the outlook in many of our shipyards was


pretty bleak, and the consequence of high unemployment in the yards was, of course, made all the more serious because so many of them were situated in districts where the level of unemployment was much in excess of the national average when the credit scheme was introduced.
No doubt the Minister of Transport had in mind also the fact that our shipbuilders are open to the direct competition of foreign builders who, directly or indirectly, in one form or another, are in many cases subsidised by their Governments. Certainly the scheme has stimulated the placing of orders for new ships in the United Kingdom by British owners, although I must add that it is impossible to determine the extent to which owners have been encouraged to place orders because of the credit scheme or, alternatively, by the improvement of the level of freight rates which went on over the last three quarters of last year. However, I think it will be found when the figures become available that in terms of tonnage about 40 per cent. of the 1963 orders are ships making use of the credit scheme. But, of course, it does not follow that if an owner used the credit scheme he would not have ordered a ship if no credit scheme had been available to him. It is certainly the case that without this stimulus of participation in the credit scheme foreign shipowners have recently placed many orders, particularly for those classes of ships which I think the Minister of Transport mentioned—namely, large tankers and large bulk carriers, dry cargo vessels.
Some new orders from foreign owners have been secured by British builders in the face of very keen competition from foreign builders, who, as the hon. Member for Sunderland, North has reminded us, have had the advantage of being able to obtain cheaper steel supplies. This fact should be noted in South Wales today. The price of steel is the most important factor in the price of a ship, and a saving of only £5 on each ton of steel which goes into the construction of a 70,000 ton deadweight tanker represents a reduction in the cost of construction of £100,000. An order for a ship can be won or lost by a British ship-

builder for a very much smaller sum than £100,000.
It seems too absurd for words, but it is nevertheless true, that until the credit scheme became operative a foreign shipowner who placed an order for a ship with a British builder was able to obtain from the British Government through export credit guarantees more advantageous credit facilities than a British owner. The Financial Memorandum of the Bill says:
…loans will not impose any eventual burden on the Exchequer.
Why then, I ask the Minister, bring this credit scheme to an end in May of this year? I understand that the whole permitted total of £75 million has already been pledged or very nearly so. Therefore, no more loans can be authorised unless the sum available is increased. So the Government credit for British owners to build ships in British yards has dried up. Once again. British owners will be placed in a disadvantageous position by the Minister of Transport because for British owners the shipbuilding credit scheme will have gone but for foreign owners credit facilities through export credit guarantees will remain. To me, and. I would have thought, to most people, this seems completely potty and altogether wrong. Why should foreign owners be assisted to a greater extent than British owners by our Government?
If the Minister of Transport is really going to allow this, I should like the Parliamentary Secretary to tell us why it is to be allowed. In any case, is it not unwise to terminate the shipbuilding credit scheme before the Government, the shipowners and the shipbuilders have really learnt its potential in helping owners and builders? We really do not know whether that potential has been exhausted. I should be grateful if the Parliamentary Secretary would give me an answer to that question.
I conclude by referring very briefly to the future prospects of the shipping and shipbuilding industries. As has already been said, the shipbuilding capacity of the world is far in excess of normal demands, and sooner or later there must be contraction. No doubt British shipbuilders will not wholly escape from this painful process. British shipowners are the best customers of


our shipbuilders, but of world tonnage the proportion flying the Red Ensign grows ever less. Trade reservation in favour of their own ships, other forms of flag discrimination, subsidies and the use of flags of convenience—all these practices are pursued by foreign Governments and foreign shipowners, and they are spreading and growing in intensity. There are sections of the British Merchant Navy for which the outlook is pretty dismal, and it seems that there will be ever-lessening orders for the shipbuilders after the period covered by the provisions of the Bill, as the hon. Member for Sunderland, North said.
The scheme has certainly been of assistance, but it will not solve the long-term problem of either shipowners or shipbuilders. I reinforce what the hon. Member for Sunderland, North said by expressing the hope that quite soon the Minister of Transport will give further thought to shipping and will let the House know what are his proposals for dealing with a problem which is already urgent and which may be far more urgent only two or three years ahead.

4.56 p.m.

Dr. J. Dickson Mabon: I agree with practically everything said by the hon. and gallant Member for Barkston Ash (Sir L. Ropner), but I disagree with his last remarks because I do not feel that the present Minister of Transport is the man to give us a new vision of the shipbuilding industry of tomorrow. He demonstrated that in the debate today.

Mr. Marples: The reference was to shipping.

Dr. Mabon: Shipbuilding and shipping—since they go hand in hand, if that is the right metaphor. There have been so many mixed metaphors today that I am afraid of using any.
For four years the Minister has lived with the problem and has produced no solution. The Bill is his latest palliative, and I agree with my hon. Friend the Member for Sunderland. North (Mr. Willey) that it is no long-term solution to the troubles of the shipbuilding industry.
But let us start at the beginning with shipping. It is my firm belief, which has been expressed by several of my

hon. Friends and on occasions by hon. Members opposite, that the Government must make up their mind on the position which they will adopt in the international field in relation to the protection of British shipping. Until now the Government have taken a classical laissez faireposition, which is that we are a great shipping nation and that we disdain any restrictive or protective practices whatever and therefore we discourage these new countries from unfairly adopting uneconomic, nationalistic, Chauvinistic techniques or subterfuges, which interfere with the natural flow of commerce.
This was a valid position to adopt in Edwardian days before the First World War, and perhaps—although I doubt it—even in the years between the wars, but it is certainly not a position for us to take in the mid-1950s and 1960s. I am not for a moment suggesting that we should recklessly embark on a legislative programme to arm ourselves with powers which we should then proceed to use against other nations. I accept that in the present state of commerce in the world that would perhaps hurt us more than it would help us, but it would not have been wrong to put Bills before the House to give us reserve retaliatory powers and the capability to hit back at those countries which have hit us hard over preceding years. This is the sadness of it—that in a Bill such as this, which is, after all, an attempt to help the shipbuilding industry, no effort has been made to get at the root of the problem, which is to help the development of our shipping industry. But I see that you are showing a little concern about this argument, Mr. Deputy-Speaker.

Mr. Deputy-Speaker (Sir Robert Grimston): The purpose of the Bill is to make loans for the construction and alteration of ships. I have allowed the debate to go fairly wide and to include a number of subjects, but I think that to discuss legislation against the shipping practices of other countries is going too wide.

Dr. Mabon: I thank you for allowing me to go so far. At least I have made my point and have backed up the comments of the hon. and gallant Member for Barkston Ash. If we had had such legislation perhaps our position in inter-


national conferences would have been stronger and we should have reached the settlements which we wanted. We have seen the position growing very much worse in past months, and no doubt this subject will be raised once again in the conversations which the Prime Minister will have with the President of the United States next month.
I pass quickly to the shipbuilding industry itself. I agree very much with what my hon. Friend the Member for Sunderland, North said about the price of steel and the price which the shipbuilding industry has had to pay for the denationalisation of steel. It will be interesting to read what the Restrictive Trade Practices Court, about which we heard earlier from the Secretary of State for Industry and Trade, will say about the practice of the private steel industry of calling its maximum prices in fact its minimum prices to shipbuilders. It will be interesting to compare our prices when that court examines them in relation to Common Market prices, because our shipbuilding industry, both managers and men, has to face a very difficult problem of increasing competition from Common Market countries. These are matters which ought to engage the Minister's attention, and if we are to concern ourselves with trying to solve the problems of the shipbuilding industry he ought to have said this afternoon that he is concerned about the price of steel and about the situation in the steel industry and that he is most anxious to help the shipbuilding industry to meet its difficulties in this matter.
I join my hon. Friend the Member for Sunderland, North in lamenting the Minister's phrase that the Bill represents a once-for-all, sharp, short assistance to the shipbuilding industry. I regret that very much. It is a very sad situation that after four years it emerges that this is the Minister's only solution, and that when we press him on the subject of what happens after the spring of 1965, he does not know what the situation will be in the shipbuilding industry then, nor, for that matter, can he outline what he hopes will be the position later in 1965.
He keeps repeating pessimistic phrases and is for ever depressing the shipbuilders, whether managers or men,

with his phrases about the industry not being the right size or shape. If a man of his intelligence knows that the industry is not of the right size, why does he not tell the industry what size it ought to be? But he never does. He is for ever the pessimistic unfair critic of the industry, always lamenting its faults, sometimes, in fact, to the detriment of its interests by telling the world about it, as when he sent an accountant round the Western European countries to tell us how bad were the economics of our shipbuilding industry. Perhaps his pessimism is unintentional, but it appears that he is trying to run down the industry. He told us again that the industry is getting £75 million and that after this breathing space rigorous competition will quickly put it in its place and bring it down to the right size and shape. What is the right size and shape? I know that the Minister has his limitations, although he does not think so, but he ought at least to consult the Government's advisers in the National Economic Development Council, who assess the position of our different industries in relation to the plans for the development of the country—the famous 4 per cent. national increase at which the Prime Minister tells us the Government are aiming after 12 years of having failed to secure the target in any single year.
Why not ask the National Economic Development Council? Why does not the Minister tell the Council, "I want a special study of the shipbuilding industry. I want to know what is the place of the United Kingdom shipbuilding industry in the 1960s and 1970s so that I know what kind of advice I can give to the Cabinet in relation to its help for this industry through the difficult years ahead. Will it be a complete write-off or will it be an industry one-third of the present size? Or can it remain substantially as it is? I can then tell the Cabinet the answer". The Secretary of State for Industry and Trade will then be able better to look after all the shipbuilding areas which may be affected adversely and declare them growth areas. My hon. Friend the Member for Sunderland, North pointed out that in the North-East plan Sunderland is not a growth area. The same situation applies to my constituency. Areas in which shipbuilding ceases and which, through the


Ministerial neglect, are in difficulties, will see unemployment but are yet not in the White Paper plan.
If the Minister can do nothing to help us in the face of events today, at least he might tell us this and give, us a chance—those who represent these constituencies—to try to get consideration from other Government Departments in relation to the training or retraining of the many skilled men who will be put out of work. But the Minister is dilly-dallying. He is making no attempt to get to the hard core of the problem. He is not telling us what position the shipbuilding industry should take in the life of the country. When he tells us that the labour forcehas fallen and has been falling consistently for many years, he does so as if the revelation suddenly came upon him in the year 1961 with a crisis in the shipbuilding industry.
In fact, the fall in orders has been going on since 1956. Indeed, in some places it started even before that. The modernisation of many yards was delayed to keep pace with full order books, and then they began the move towards modernisation, perhaps a little too late. We have had this problem of a falling labour force, a discontented labour force, an uncertain labour force and a dissatisfied management for many years, certainly all the years during which the Minister has been in charge of the Ministry. I believe that with the Order in Council which was approved by the House in the winter of 1959, transferring functions to the Minister of Transport, a serious mistake was made, because no one Minister can be responsible for all the affairs in the right hon. Gentleman's Department together with the problems of shipbuilding. Since then justice has not been done to the seriousness of the problem.
I put it to the right hon. Gentleman that this is a controversial Bill—not because we shall vote against it, for we shall not, but because we realise that it could have been a thousand times better if it had been a Bill intended not as a palliative for the past, because the money has all been spent, but rather as a promise and intention for the future. This is a Bill which ought to have provisions allowing the Minister to extend the scheme from time to time as

he wishes and to move in different directions in regard to shipbuilding. There is no reason why such a Bill could not be the instrument by which the Government should provide money to finance nuclear reactors in ships. There is no reason why it should not be the instrument by which we made possible the development of other forms of marine propulsion. There is no reason why it should not be the instrument for development in many ways of which the Minister has not thought.
But, instead, it dies with its entry on to the Statute Book. It is dead once it is approved, because the money has all been spent, and the Minister has to go through the whole rigmarole again of setting up committees, establishing machinery and approving applications. What a waste of time, effort and energy. How short-sighted when on Second Reading the Minister tells the industry, "This is the last hope you have. This is year of breathing space. After this you are on your own. After the election you are on your own, and through the rigours of competition you will find your own size and shape".
The Minister said that the Committee set up to vet all these loans consisted of persons who were able to assess the managerial prowess, economic efficiency and various virtues of enterprise in this country and, having settled that, to award the loans to the applicants and to see which yards could meet the obligations sought by the shipowners.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): I think that the hon. Member misunderstood my right hon. Friend. The Committee had nothing to do with the yards to which the orders went. It was concerned only with recommending the shipowners appropriate to receive the loans.

Dr. Mabon: I accept that. Perhaps I seem to have misled the House in this regard. But I take it that the Minister feels that he is in a position to make comments about the efficiency of shipping enterprises. Why does he not set up a comparable committee to give an impartial assessment of the shipbuilding virtues within the industry and all concerned with the industry? Then he would be able to talk in precise terms


without slandering everybody. He would be able to state who are doing well in the shipbuilding industry and, by omission, let those who are not mentioned know that they are not doing well.
It is by that, and only by that, that the right hon. Gentleman can escape the charge that he is an enemy of the industry by his constant general criticism of it. I feel sincerely that unless the Minister withdraws his general charges against the industry he will depress it still further.
Turning to the problem of the workpeople, how is it possible to get the co-operation which we so earnestly hope for if we do not give the men the feeling that they are part not only of a family but of a living family? The right hon. Gentleman constantly tells us that the shipbuilding industry is going down the drain. How does the Minister expect the men, whose only defence against unemployment is restrictive practice, to surrender that weapon? The whole thing it potty, to use the words of the hon. and gallant Member for Barkston Ash. If we want the men to accept the fact, and I hope that they will, that the industry should play as a team, that there should be flexibility and all the rest in the yards, then we can only do it if the men are given security of tenure in their jobs—not necessarily the jobs which they are doing at the moment but the jobs which they may be doing in the future.
When confidence comes to the industry and justice comes to the men we shall have a contented labour force and one able to do more than it does at present by way of productivity, imagination and enterprise. That is what is needed. We cannot say to an industry in such a difficult situation as the Minister is saying, "This is the last time we shall help you, and that will be the end".

5.30 p.m.

Mr. Paul Williams: I think everyone will agree with some of the latter sentiments expressed by the hon. Member for Greenock (Dr. Dickson Mabon). There is no doubt at all that on the internal relations issue of the industry there is a dramatic and immediate need to reconcile two apparently contradictory points of view, points of view which the hon. Member for Sunderland, North (Mr. Willey) and

I have put repeatedly in shipbuilding debates. It is the apparent contradiction of the demand for flexibility by management and for security by trade unionists. I personally believe that the time has long since passed for Government initiative, whether by the Ministry of Transport or the Ministry of Labour, in the calling together of representatives of the two sides of industry, for at the moment the two sides never seem to come to the point of decision. I should have thought there was a rôle which could be played by the Ministry, not necessarily in order to come to an immediate decision but to encourage the two sides to come to a more fruitful understanding about securing the greater flexibility which must be the prerequisite for greater security.
Having said that, I would, in a small, timorous voice, like to welcome the Bill. I believe that it has brought necessary but nevertheless short-term sustenance to a hard-pressed industry. It is, in fact, very sizeable help. Eight hundred and fifty thousand tons of orders is something not to be sneezed at in a shipbuilding world which is cutting its own throat because of its various overcapacities. However, I think that in the winding-up speech the Minister might give us a bit of detail on one element of this £75 million, more particularly the last £15 million or £17 million. I refer, of course, to the Cunard.
We had a North Atlantic Shipping Bill a few years ago which, I am delighted to say, disappeared below the surface unlamented. I should like to know how this element of the credit facility is to be used to assist Cunard. I should like to think that we could get a more modern method of tendering in the industry. Rather than have three or four firms being invited to tender for the new Cunarder, the firm which would have got the order under the previous scheme should be asked to enter into negotiation, thereby having only one tender and not wasting the time, energy and expense of the other companies. This would secure justice in relation to the other Bill and would short-circuit negotiations on this scheme. It would achieve an economy for the industry which might be worth while.
I welcome the Bill for two reasons. First, it releases a number of pent up


orders which have been pending in the shipowners' minds while awaiting the Government's decision. One might say that this scheme has been held up for too long, but, in fact, a number of orders were in train awaiting the announcement of the scheme, and the very fact that the scheme has been brought into being has brought these orders forward. Secondly, it was a stimulus to new orders. I am delighted with what the Minister said. He said that this was in no way an attempt to bolster up the inefficient, which, of course, is a perfectly sound and laudable ambition.
Then one comes to phrases such as "rationalisation" and "rather inefficient". What yardstick are we to use? I am delighted with some of the figures produced by my hon. Friend. He gave the figure of 53,000 employees before the scheme was announced, rising to 70,000 by March this year. That is an appreciable increase. But are these figures going to be sustained? That is what is really important for the shipbuilding industry.
Again, coming back to the point of security and flexibility, if we could say that 70,000 employees was a reasonable figure to turn out 1¼ million tons of shipping a year, this would be security not in fixed figures but in an estimate of what the industry needs. I personally believe that the nigger in the woodpile—or is it the white man in the woodpile, I am not sure—is that the Government—not this Government but any Government—have not sufficiently appreciated the rôle of shipping in the nation's economy. Every shipbuilding order is an export order even if it is for a British owner, because it saves in foreign currency. Indeed, it may do more. It may be a positive earner of foreign currency. Allied to that are the insurance associations that flow from British shipping crossing the oceans of the world. In this way, one begins to scratch at the surface of understanding the importance of the British shipping industry.
Unfortunately, we find repeatedly that Governments, perhaps even Ministers of Transport, Presidents of the Board of Trade and Chancellors of the Exchequer do not understand the dramatic contribution which British shipping makes to

the sustenance of the economy and to high and rising standards of living. Therefore, I go further and say that if we are to assist our shipping industry effectively and in tangible terms it may mean making tax concessions to it of a sizeable nature. We must maintain a building capacity which is necessary for economic reasons and for strategic reasons too.
Therefore, I say that there are two reasons for sustaining the British shipping industry and the British shipbuilding industry. One reason is economic. That is an argument sufficient to itself. The other reason is the strategic need to maintain a capacity which can be called upon in times of need and urgency. But there is doubt, I think, about this scheme in the minds of some people. One doubt is, as my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) said, that we are possibly now going back to the position where foreign owners will again be preferred to British owners in the credit facilities available to them for placing orders in British yards. If we are going back to that scheme it will be Bedlam run riot again.
With his visual candour, the hon. Member for Sunderland, North admitted that he made a speech about this matter some time ago. Again with his usual candour, he did not admit that anyone on this side of the House took the same line on the question of credit. But I think he would now admitthat there were a number of hon. Members on both sides who pointed out this contradiction. If we go back to this contradiction again it will create a disservice to the industry. It is something which must be guarded against if there is to be long-term confidence and security in the industry, which we all want to see.
I say quite frankly that I am sorry that machinery was not included in the scheme. It would have been a help to a number of makers of smaller parts if machinery had been included, although I quite understand that there could be a hesitation about it.

Vice-Admiral Hughes Hallett: Machinery is included so long as it is made in this country. If the marine engines are ordered abroad, the credit scheme cannot apply to the price of the engines.

Mr. Williams: Will my hon. and gallant Friend confirm that it applies also to things like winches and machinery of that kind? I am not quite sure about that.

Vice-Admiral Hughes Hallett: It applies to the entire ship.

Mr. Williams: Then I withdraw the point I made. I am delighted that the matter is cleared up in that way. There was some doubt about it earlier.
Whatever the scheme has done in providing orders and in providing employment, there is considerable doubt about whether it is providing profitable operations for the companies building the ships themselves. There is the difficult problem here—I do not know how the House can even begin to resolve it—that the orders are not sufficiently profitable, or may even be making marginal losses, so, although one is keeping yards operating and although the yards may be providing employment and paying wages, the total effect may not be a very great contribution to the financial solvency of the companies involved in those orders for a long time.
I come now to one or two suggestions. I have already made one in relation to Cunard, suggesting that there should be a special form of tendering for that ship. Second, like the hon. Member for Greenock, I regret that no move was made in the application of this credit facility to take the plunge in nuclear power. We are delaying far too long about this. In the past, I took the view—I admit it frankly—that we ought to wait for a commercial ship, but we now see other nations not only catching up but overtaking us at a great rate of knots. We cannot much longer go on failing to get our feet wet in this matter. We must have some operating experience. Therefore, I hope that we shall hear in the winding-up speech something about what is happening in nuclear power, related to this particular Bill, and why an opportunity could not have been taken here and now to make the first step.
I have already said something about labour relations. I firmly believe that an initiative can and should now be taken in this connection.
Next, I mirror the remarks of my hon. and gallant Friend the Member for

Barkston Ash on the subject of steel prices. A reduction of £5 a ton on a 75,000-ton deadweight tanker, as he said, would represent an effective saving of £100,000, which is a lot of money, about 3 per cent. of the cost of such a vessel. It would be a very valuable contribution towards getting orders from foreign owners.
I return to my point about having a right appreciation by the Government of these twin industries. We need a right appraisal both at the Treasury and at the Board of Trade of the rôle of British shipping allied to a resolve to secure its position in all trade treaties. I should like an assurance from the Government that this matter of trade treaties is properly borne in mind and that the Ministry of Transport, representing the shipping industry, makes its voice heard.
There still remains the hoary old question of whether the Ministry of Transport is the right Ministry. In saying this, I do not in any way attack my right hon. Friend. I believe that he has become progressively more sympathetic to the shipping and shipbuilding industry. Nevertheless, I think that it is really too large a Ministry, embracing as it does roads, railways and other things. One puts them in that order of priority, of course. Shipping and shipbuilding should be first, but they always come last. It seems that shipping matters do not rate anything higher than a protest at a meeting between the Prime Minister and the President in Washington, and the protests are then shelved and forgotten.
Over the years, those who have taken an interest in shipping matters have questioned a succession of Prime Ministers and Ministers of Transport about what representations have been made to the Americans. I agree with those who say that we should take power to take retaliatory action. The very threat of it might have a salutary effect. However, having said that, I welcome the action of the Minister in slapping back into the face of the American Federal Maritime Commission—

Mr. Deputy-Speaker: Order. The hon. Gentleman is now straying into a subject which goes wide of the Bill.

Mr. Williams: I bow to your Ruling, Mr. Deputy-Speaker.


I put one more question to my right hon. Friend. One of the burdens on the shipbuilding and marine engine industries is the fuel oil tax. Engines have to be shore-tested, and this may cost tens of thousands of £s not in fuel oil but in fuel oil duty. Surely, a concession could have been negotiated in preparing this loan scheme. Perhaps it may be done by development contract—it may now be in train—but there is no doubt that this duty is a heavy impost on an industry which is trying to develop new engines. I hope that something further can be said in this connection.
I conclude by referring to steel and shipbuilding. I understand that there are those who would nationalise one or other or both of these industries. I cannot persuade myself that the nationalisation of either of them could, by the longest stretch of the imagination, be thought to be of any value whatever to British shipbuilding. On the contrary, it would be more likely to drive away foreign orders. I cannot persuade myself that a British nationalised shipbuilding corporation would be liable to get the sort of orders which our yards can get in competition with foreign yards, but, rather, the very fact of nationalisation would make foreign owners look elsewhere. In welcoming the Bill, therefore, I welcome also the enterprise of our free industry and reject the concept of nationalisation.

5.26 p.m.

Mr. E. Fernyhough: Years ago, I listened to the hon. Member for Sunderland, South (Mr. P. Williams), week after week, putting questions to his own Front Bench asking why the shipbuilding industry could not get from the privately-owned steel industry the plates which it required to carry out the contracts which it had obtained from both British and foreign shipping lines. It was a private industry, perfectly free to trade where it liked, without regard to the national interest; but, of course, had the steel industry been nationalised at the time of which I am speaking, the hon. Gentleman would not have needed to ask those questions.
This afternoon, everyone has spoken about the price of steel and the part it plays in the cost of building a ship. It

was hon. Members opposite who made the chairman of the nationalised steel industry put up the price of steel when he did not think that it was necessary, thus making steel more expensive than it need have been for every shipbuilding yard in the country. I could go on arguing the merits of nationalisation, but, Mr. Deputy-Speaker, I think that you have been sufficiently tolerant in allowing me to go thus far, and I leave it there. We shall carry out that task in a very short time, and the hon. Gentleman will not be sitting there to see how it works.
The hon. Member for Sunderland, South made a very important point about security in the industry. One of the most saddening experiences for anyone interested in shipbuilding and the men employed in the industry is to go to a launching. One sees there the men who are proud, and rightly proud, of the work which they have put into the ship. Very often, the launching takes place at about 12o'clock or, perhaps, 3 o'clock in the afternoon, and then, at 5 o'clock, hundreds of the men who contributed to the building of that magnificent vessel are told that they are not wanted, and they do not know when next they will be called back to work.
This is 1964. Can one wonder why there is trouble from time to time in the industry when men are still treated in that way and they have no more security than there was in the docks years ago? One day, the industry will have to realise that it must have a scheme similar to what now obtains in the docks. There must be a system of fall-back pay so that, if there is no work, a man is sustained by the industry until he is wanted. Some such principle must be introduced into shipbuilding and ship-repairing if there is ever to be a decent management-worker relationship. Given the present casual basis of employment, it will be impossible to build up the understanding which is so necessary if the industry is to have a really successful future.
Like the hon. Member for Sunderland, South, I welcome the Bill for what it is. We in the North-East have probably done better out of it than any other part of the country, and this reflects great credit on our yards and the men who work in them. In recent


months particularly, we have shown that we are able to compete successfully with foreign competitors.
Those who tell us that the industry cannot compete successfully do not always see the picture in full focus. The shipbuilder is still dependent upon the private contractor for many of his supplies. No matter how tightly he controls his own prices, if contractors allow the prices of the goods which they supply to rise, he still finds himself facing difficulties which are not of his own making. Some attempt should be made, therefore, to try to get contractors to play the game so that the shipbuilders do not always receive the blame when they are charged with not being competitive.
It is unfortunate that this is, as the Minister said, a once-for-all scheme, that there is to be this £75 million and then the industry will be left where it was before the £75 million was granted. It is noteworthy that the Bill has been introduced within the last 12 months of the present Administration. The new interest of the Minister of Transport in shipbuilding is paralleled by the sudden interest displayed this afternoon by the President of the Board of Trade in restrictive practices, resale price maintenance, etc. I do not believe that we should have had the Bill if the Administration had had two or three years to run.
It is significant that, because of the Bill, there will be, in March this year, two months from now, 13,000 more people employed in the industry than there were before the scheme was announced. This is welcome news. We are all very happy that there should be full employment in the shipyards and the ship-repairing industry. But why has it taken the Government so long to decide that something had to be done? Why are they so certain that it will not be necessary after the present financial blood transfusion to do anything more to assist the industry's future? After all, the 850,000 tons of new shipping which this £75 million represents is equivalent to only eight months' work for the British shipbuilding industry. They are very welcome eight months, but what about 12 or 18 months from now? Suppose the indus-

try then is in the same parlous plight it was in 12 months ago. Will nothing further be done?
The point, quite frankly, is that this has given everybody, I hope, a bit of a breathing space, and I hope that the Minister, and the industry, and all those concerned about the future of this industry, will get together to see what they can do to guarantee that it has a good future. We all know the problems which the industry faces. I hope they will be tackled, by the only people who can help, with a little more courage and determination than has been shown in the past.
We are granting £75 million under this Bill to the British shipping industry. Leyland Motors has just secured from Cuba a big contract for buses, and Leyland Motors cannot find a British ship in which to take those British exports to Cuba. I think we have a right to know what hon. and right hon. Gentlemen opposite are going to do about this, because under this Bill we are giving credits to the tune of £75 million to British shipping lines, and Leyland's could not find a single British shipping line to carry to Cuba the buses for which it has secured a contract from Cuba. And the Admiralty could not help Leyland's. So this export is going to be carried by ships from the German Democratic Republic. This really is a scandal. At a time when we are discussing credits of £75 million to our own shipping lines it is monstrous that not a single one of those lines was prepared to carry British manufactured buses to Cuba and Leyland Motors had to go to a Communist country in order to get ships to transport their export orders.
Everybody knows why this is. It is because those ships would be black-listed by our American allies if they were to carry those buses. I say that the Government have a great responsibility in this matter. I repeat they should have a little more courage, and stand up with a little more determination for the freedom of the seas to which we have always subscribed.
Thirdly, may I repeat that I hope that we shall very definitely use the breathing space which this Bill gives us to try to bring greater security to the industry, and to make the prospects for those in the industry and those who own it a


little more certain and positive and prosperous in the years which lie ahead, than they have been during the last two or three years in particular.

5.40 p.m.

Mr. Rafton Pounder: I am very much indebted to have been given this opportunity to say something in this debate, and particularly to follow immediately after the hon. Member for Jarrow (Mr. Fernyhough), because on the last occasion I addressed this House—my maiden speech a month ago—he was kind enough to say some very complimentary things about me immediately after I sat down.

Although it is probably too early to gauge the full effect of the Government's shipbuilding credit scheme, there have nevertheless been a number of encouraging indications that the long dearth of orders from which British shipyards have suffered in recent years may be beginning to come to an end. Whether or not it would be altogether accurate to attribute this improvement entirely to the credit scheme would be to dogmatise, and that is something I am not prepared to do, but I think that there can be no doubt at all that the Government's scheme did come at exactly the right psychological moment, a moment not only when British shipyards had made themselves perhaps more competitive than they had been hitherto, but also at the time when British shipowners were beginning to give serious consideration as to whether or not the time had come, or at any rate was approaching, when they should modernise and re-equip their fleets.
Under the terms of the scheme, shipowners had an incentive to make up their minds quickly and to make their applications for assistance without delay, because both the amount of money to be allocated and also the period of time when applications for assistance had to be made were both limited. So far as one can gather from my right hon. Friend's opening remarks in this debate, the results to date have been gratifying. As he said, when the original loan of £30 million was announced some nine months or so ago the initial impression in British shipyards was that this was a useful beginning but that it was certainly no more than that, and that it would not be sufficient to lift the indus-

try out of its depression. Since then the figure has been more than doubled, and shipbuilders are becoming somewhat more optimistic. For the next year or so the overall prospects of the industry are reasonably bright.
But, unfortunately, it is only for the next year or so. It would be quite wrong to suggest, as I have heard many people not in this House but outside suggest, that this once and for all Government shot on the arm would resolve the shipbuilders' problems. Further rationalisation see us to be almost inevitable. Certainly in Belfast the great shipbuilding firm there has already faced up to this need and has carried through an imaginative and far-reaching programme of modernisation.
The new wave of orders has been very unevenly spread, and, at any rate excluding the project of the Q4, it is very unlikely that the orders placed under the scheme will be providing employment in, say, a year or eighteen months from now. Unfortunately, there is still a disquietingly large amount of shipbuilding capacity in the world unutilised, coupled with an enormous volume of shipping tonnage plying the high seas for trade. No action by any one Government can solve these critical problems, put what one can say is that the British Government have given the British shipbuilding industry a stimulus at a particularly opportune time, and I think it is fair to say, partly for that reason, and partly as a result of the improvements which the shipbuilding industry has made in itself, that it would be wrong to say that Britain is in a more parlous position now than most of her overseas competitors. Britain can no longer be fairly described as the most ill member of a world-wide sick industry. Nor, indeed, need she be in future if advantage is taken of the new flow of orders to carry out the programme of modernisation so urgently and desperately needed in British shipyards. These are almost as much a responsibility for the trade unions as they are for management.
I think it is probably fair to say that in any event Britain's future as a shipbuilding nation almost certainly depends upon concentrating on the production of high quality shipping, because it is in this sphere that our main strength un-


doubtedly lies, and I would submit that no reference to high quality shipbuilding would be complete without a mention of the Belfast shipyard where for more than a century countless ships of many varying dimensions and designs have been produced, and where the very high quality of workmanship bears favourable comparison with that anywhere in the world.
But although the clouds on the horizon may have appeared to have lifted somewhat, at least for the more efficiently managed firms, nobody should expect a quick end to the shipbuilders' troubles. The recovery has been somewhat selective. There is no doubt at all that some yards have benefited quite substantially inrecent months, whereas others have benefited barely at all, and nothing has emerged, in my submission, to alter the general impression that a major process of amalgamation and concentration in the shipbuilding industry lies ahead.
Although the industry as a whole is no longer in the slough of depression, the prices at which business is being won are still devastatingly severe. The financial stability of many firms in the industry will require a long time to be re-established after the recent bad years, but at least the point appears to have been reached, whether a result of this Bill or not, where a certain number of orders are going to the more efficient firms in the industry. The indiscriminate slump in orders of eighteen months ago no longer seems quite to obtain as it did until very recently indeed.
Thus far I have confined my remarks to the main issue of the shipbuilding credit scheme and the improved situation which it has in some part initiated. There is, I regret to say, a great deal of ill-informed talk on how shipyards can improve their methods. I wish to refer to only one of those ill-informed ideas. Times without number one hears people say that if only our shipyards and marine engine works would adopt the principle of interchangeability of parts then the prime costs of manufacture could be reduced and much time and expense would be saved in maintenance. Many things may be matters of opinion, but one thing is certain: the idea of interchangeability of parts as between one shipbuilder and another and as between

one manufacturer of powerful propelling machinery and another is simply academic nonsense.
I would like to conclude by requesting—and thereby mirroring what has been said by other speakers today—the Government to give serious consideration to the extension of the principle of this Bill for a further period and also of providing, therefore, further financial assistance—say, another Bill which would provide a loan of, say, £20 million to £25 million per annum for the next three years. It is generally acknowledged, and rightly so, that this Bill has given a much needed fillip to the shipbuilding industry, but one sunny day simply does not make a summer. The industry does require additional assistance if it is to be given a reasonable opportunity of completing its necessary programme of reorganisation. Shipbuilding is an industry vital to the economic well-being not only of Northern Ireland but also of several regions in the rest of the United Kingdom, the North-East Coast, the Clyde and Merseyside, to mention three. If the £75 million injection proves to be insufficient, then I hope that the Government will consider an additional financial jab into the vein of this industry.

5.48 p.m.

Mr. Cyril Bence: I certainly agree with much the hon. Member for Belfast, South (Mr. Pounder) has said, especially the point he made that the British shipbuilding industry is not the most ill of sick industries. I certainly agree with that, because I have never believed the British shipbuilding industry to be as decrepit as some of its most vigorous critics have made it out to be. Certainly, in the last five years or so a famous firm in my own constituency has spent some £4 million to £5 million on modernisation.
The British shipbuilding industry is as competent today as ever it was to meet fair and just commercial competition from whatever quarter it comes. Unfortunately, as the hon. Member for Sunderland, South (Mr. P. Williams) intimated, much of that competition is not, in the sense that we understand it, fair, reasonable, open, commercial competition, and, unfortunately, I must subscribe to the position which I am


sure will be taken by the Parliamentary Secretary and say that it is no answer to the problem of uncommercial and unethical practices by someone else to adopt them oneself. That is no answer. It is merely an exacerbation of the problem.
The responsibility of the trade unions and employers in the efficient and economic production of ships of high quality is a truism. The main responsibility of producing anything in this country rests not with the Government but with those engaged in the production of wealth, from the managing director down to the office boy. I look upon this Bill as another instance of the Government saying to an industry, as they should say to every industry, that the function of the Government is not to make the nation prosperous. Governments cannot make the nation prosperous. What they can do is do give a lead and to create a feeling of confidence so that people get stuck into their jobs and are not afraid of the future, thus bringing prosperity not only to themselves but to the country as a whole.
One thing about the Bill which disappoints me—[Interruption.] That is a good old trade union and Socialist philosophy. This is a case of earning the nation's income by good, conscientious work and not by speculation or gambling. This is creating wealth, not on the Stock Exchange but on the factory floor and in the shipyard. That is the difference between the hon. Member and myself. This Bill is a palliative. The Government are offering to take the place of the commercial banks for a short time. The commercial banks cannot give the extended credit which is necessary. They have not the resources to finance the shipbuilding industry. Therefore, the Government step in and finance to the tune of £75 million, an industry which at the moment cannot be financed by private enterprise.
This is an admission that the shipowners of this country cannot get credit at sufficiently satisfactory terms from the commercial banks or any other financial institution. Therefore, the Government step in and act as the dispensers of credit to enable our owners to replace their fleets. They have been forced info this position by the practice of other nations in replacing their fleets. The

question whether the present Administration will be in power in 12 months' time is problematical, but I hope that this is not a temporary measure to help the shipbuilding industry but that it will become interwoven into our general structure for financing certain basic activities. I hope that the principle which apples in the case of the White Fish Authority and the nationalised industries wil1 apply in the shipbuilding industry.
As I say, the Government have become a great financing institution for the shipbuilding industry. This is important because the shipbuilding industry has returned to the position of being an industry employing casual labour. In my constituency, John Brown & Co. Ltd., probably one of the best known yards in the country, has just launched a wonderful vessel, the S.S. "Centaur". It has a specially constructed hull which enables it not only to dock alongside a quay but to discharge its cargo on a beach.
Now that this ship has been launched, there is nothing immediately on hand for John Brown. Therefore, much against the company's will, 750 men in the finishing trades have had to be dismissed temporarily, although it has told them that it hopes to take them back in a few months. This undermines men's confidence. Here is a famous yard, with a fairly good order book, mostly tankers, which has been forced to treat a great deal of its labour, particularly in the finishing trades, as casual labour.
We have ended the system of casual labour in the dock industry. Why cannot it be ended in the shipbuilding industry? I feel sure that trade unions and employers in the shipbuilding industry and the Government can work out some means of ending casualisation. I have no doubt chat there are areas in the shipbuilding centres, such as the Wear, Tyne, perhaps Belfast and the Clyde, where men can move from yard to yard by agreement between the personnel managers. This mutual interchange in order to get rid of casualisation is very desirable.
I have spent a large part of my life in the motor industry. One can manufacture motor cars in bits and pieces and put them on the shelf, so to speak, as stock. If the order book is not full, one


can stockup. This cannot be done with ships. I see major difficulties in maintaining a balanced labour force and in bringing about a continuity of employment. It is difficult to imagine shipyards building up stocks of ships because there are no immediate orders. It may be possible to produce standard hulls in a small number for merchantmen or tramp ships, but that does not provide for the finishing trades. It seems to be in the finishing trades that there is this casual employment of operatives.

Mr. P. Williams: Everyone preaches in favour of standardisation for everyone else but himself. In this case, the owners—and I do not blame them—are the difficulty because they always want something tailor-made to their requirements. This is the weakness from the shipbuilding point of view, but the strength from the owning point of view. Unless an owner can get something tailor-made be cannot operate efficiently.

Mr. Bence: I am not a shipwright or an expert on shipbuilding. I can understand a company which is trading with different parts of the world and engaged in heavy traffic wanting the hull and layout of a ship to be tailored to its demands, but that does not alter the fact that within a ship itself thousands of components could be standard equipment, such as valves, pipes and all the gadgets which go into a marine engine. I imagine that there could be a range of standardised pumps. Door handles, crockery and similar articles could be manufactured in tremendous quantities to go into different passenger vessels. There could be standardised units in diesel engines even when they are made by different engineering companies.
The machine manufacturing industry is included in this. I understand that under Clause 1 the Minister can give credits to the manufacturers of propulsion machinery. Am I right about that?

Vice-Admiral Hughes Hallett: The credits are given in respect of propulsion machinery as long as it is made in this country. We allowed three ships with foreign engines to be built, but in that case the cost of the foreign engine was not included in the credit sum calculated.

Mr. Bence: I assume that the credit that was granted would cover the cost not only of the building of the hull but of the installation of the machinery if the manufacture of that machinery were in a British shipbuilding engineering shop, wherever it might be.
Standardisation is a great feature in the economic processes of manufacture. Will the Minister have powers—such as were suggested by the Minister of Aviation when we had the shotgun marriage between the manufacturers of aircraft in order to get State subsidies to keep the aircraft industry going and to put it on an economic basis—when these credits are applied for—I see that any number of loans under this Clause may be made to the same person—to make loans? I can imagine the circumstances that might arise.
If the firm of John Brown has an order for a hull from one of the big liner companies, in view of the fact that the Ministry has granted loans to the manufacturer of diesel engines, will the Minister have power under the Bill to insist that to get the full benefit of this credit the propulsion machinery in that ship must be provided by a certain company which had provided machinery for several ships of the same kind, and which was therefore able to provide it cheaper than perhaps the yard where the hull was being built?
These are the sort of things that I can imagine happening. Is there the possibility within the Bill that, as the Government are now financing the building of the machinery and the hull, if the owner decides that the hull should be built here and wants a certain type of propulsion machinery, the Minister will be in a position only to accept the proposition provided that the owner submittingthe proposition for a new vessel has manufactured in certain engineering shops propulsion machinery, and that unless that is done the Minister can refuse a loan?
I see here very great danger. I hope my assumption is wrong and that it will never come to this. I want the Government to undertake the financing of shipbuilding, which is a great national industry. I agree with what was said by the hon. Member for Sunderland, South. Unfortunately, some people in this country make a tremendous hullaballoo


about the farmers who use our land so intelligently, saving the nation hundreds of millions of dollars in foreign exchange by providing us with food. I wish that some people would shout as loud as the farmers do to show that the shipowners of this country are doing exactly the same thing. We are a maritime nation and the shipbuilders, the merchant seamen and the shipping owners, all of them co-operating, are providing a tremendous service to this country.
This is the beginning. I do not think that the Government can finance an industry for one or two years and then drop it and allow commercial finance to take over, and when things get sticky again step in. This sort of thing cannot go on any longer. This is the beginning of the Government becoming the permanent financial institution for British shipbuilding. Therefore, I want to make sure that the industry, both the shipbuilders and the owners, will retain complete freedom in placing orders and specifying the type of ships they want. They know better about this than Whitehall. I do not want anyone in Whitehall to tell the shipowners, "We will give you a loan if you have the engines built here". I want to see the people who run those industries have the right to specify the type of ships they want. Although the Government is to lend them the money, I hope that they will have sufficient confidence in these industries and in the people who run them and who know their own business.
It is the duty of any Government to see that the resources of our nation are not wasted. I hope that the Minister will give us an assurance that there will be no danger of Government intervention of the type I have described. There have been suggestions mooted many times in the shipbuilding industry that there should be a concentration of machinery building in one or two units. The Parliamentary Secretary knows this and the Minister of Transport. That has been said many times and in many quarters. There has been a suggestion that some of these yards should give up their engineering shops and that they should be centralised. I do not think that is desirable. It may be desirable to have large powerful units, but I think that it is always a good thing to have

a mixed economy, as we have on Clydebank in the firm of John Brown, which does the whole lot itself and where it can have a balanced labour force provided, of course, that the orders come in. I hope that this Bill will not lead to excessive Government powers in directing people as to where or how their ships should be built or the type of machinery that should be installed.
I am assured by the people who ought to know in the shipbuilding industry that at the present time the British shipbuilder is having to pay a higher price for British steel relative to the general price structure than that paid by shipbuilders in Europe for their steel. It is not a sufficient answer to say, as I have heard it said, that Continental steel is more expensive than British steel, but Continental steel for the European shipbuilders, as a factor in the generalcost of shipbuilding, is lower than it is in Great Britain. The shipbuilders on the Continent buy their steel from the Coal and Steel Community at a figure which bears a lower relation to the general cost than the British shipbuilder who buys steel from the British steel industry. This ought to be looked into.
I had always understood that British steel was the cheapest in the world. It certainly was at one time, even as recently as 1948. Is that no longer the position? If so, is this not one of the major difficulties facing the shipbuilding industry? If, as a cost factor in ship production, steel prices weaken our competitive position, we should know all the facts about it.
The hon. Member for Sunderland, South said he was afraid that if the steel industry became nationalised its position might become worse. Is he aware that the price of steel has risen since the industry was denationalised? It must be remembered that the industry worked in the face of tremendous obstacles during the war. It had to produce steel at a terrific rate so that we could get the ships we needed. In the five or six years after the war little time was available for refurbishing the capital which had been created in the industry long before the war and which in many cases had been completely absorbed and, in terms of machinery, worn out.
It must also be remembered that there are today many State-owned facets of


the steel industry. These make steel plate and sheet for use in shipbuilding and this shows that no one in the industry need fear the industry becoming State-owned. In fact, the Government nationalised one section of the industry a few months ago, the Drogheda Iron and Coal Company's works at Newport.
In welcoming the Bill, I hope that it will not be long before another Measure is introduced to make the State the principal financing institution for shipbuilding. Only in that way will we get rid of the casualisation of labour, give stability to the industry and ensure continuity of orders. We must bring the position to an end when people are waiting for the next order and the next extension and advance, hoping for another Bill to be introduced to give the industry easier terms.

6.12 p.m.

Mr. Stanley R. McMaster: I do not intend, in rising to welcome the Bill, to delay the House for long at this stage. Attention has already been drawn to the fact that the proposals contained in the Bill were suggested to the Government a long time ago. I recall that about a year ago, when debating the position of the British shipping and shipbuilding industry, I pressed for measures such as those set out in the Bill. At that time they were not acceptable to my right hon. Friend.
The Bill provides only a temporary respite. I was glad to note that in his speech my right hon. Friend pointed to the increase in employment which will occur in the industry as a result of the Bill. He hoped that the number of employees would increase from about 53,000 to about 70,000 by the spring of this year. That rise will be welcomed, but it is to be deplored that the conditions in shipbuilding in Britain have been the subject of so much uncertainty for those employed in it. As my right hon. Friend pointed out, we face competition from all parts of the world, particularly the yards in Japan, Sweden, Germany and Holland.
It must not be forgotten that countries abroad give assistance to their shipbuilding industries, whether in the way suggested by the hon. Member for Dunbartonshire, East (Mr. Bence)—some

form of steel subsidy—by direct assistance, or even by a policy of scrap and build, which the French are about to introduce. Whatever may be said about the scrap and build policy, it is assistance.
In many previous debates, I have pressed my right hon. Friend to study the assistance that is given abroad. I have urged him to use all the means at his disposal to persuade other countries to abandon unfair practices such as those I have mentioned, or even the practice of shipowning—since one practice can affect another—but until he is successful in persuading them to abandon these practices we must, if we are to maintain our shipbuilding industry, equal the assistance that is given abroad.
Since there is no sign that we are being successful in persuading them to abandon these practices, I regret that the assistance given under the Bill has not been taken a step further. It is limited. One hon. Member opposite spoke about the assistance under the Bill being a grant to the industry. It is not a grant but a loan. Only by way of saving the industry some interest is it, I suspect, anything else, and I believe that that saving will not amount to many millions of pounds a year.

Mr. Bence: Does the hon. Member know how much the saving will be?

Mr. McMaster: Not exactly, but I suspect that it will not be more than £1 million or £2 million, but perhaps my right hon. Friend will correct me if I am wrong. The Bill does so much good for so little cost that it is a pity that it has not been extended, because it is the duty of the Government to ensure that British shipbuilders are not at a disadvantage compared with their overseas counterparts.
How can uncertainty of tenure of employment come to an end unless there can be some certainty that there will be a continuing flow of orders to the British yards? I have been relieved to see the number of orders which have been placed with Harland and Wolff in Northern Ireland. I was also pleased to learn that that firm was the largest shipbuilder in the United Kingdom last year. The company has, perhaps, benefited to a greater extent than any other British yard, but the position on the Lagan and
Belfast is somewhat different to that on the Clyde, Tyne and Merseyside, where several builders are building on one estuary and river. In Belfast there is now only one shipyard, and that is owned by Harland and Wolff.
I recently had the pleasure of going round that yard and of seeing the modernisation that has been carried out there. The improvements were seen by my hon. Friend the Parliamentary Secretary when he visited Northern Ireland, and I welcome the interest that has been shown by the Government to Northern Ireland. While there I saw the new craneage, although the modernisation has meant men being declared redundant in large numbers. In the past five years, since I came to this House, I have seen the number of men employed at Harland and Wolff's yard cut by half—from about 22,000 or 23,000 to about 10,000 or 11,000. Despite the new arrangements, men were being laid off before Christmas. However, this redundancy was overcome and the matter was soon resolved in the sensible way which these matters are usually dealt with in Belfast and the men returned to work.
In a recent discussion with the trade unions, in Belfast, I received reassuring information about the measure of flexibility that had been accepted at Harland and Wolff. I must re-emphasise the point, because if we expect concessions from the trade unions on things like demarcation, designed to deal with contingencies such as those that have arisen over the past four or five years when men have been laid off, it is reasonable in return to offer the men left some continuing security of employment. This security can only be ensured by extending the terms of Bills like this.
Another point concerns interpretation. The Explanatory and Financial Memorandum says that Clause 1
…enables the Minister to make loans for the construction, completion or alteration of ships in shipyards…
My information—and I have asked Parliamentary Questions on it—is that this provision applies only to major alterations—to "jungle-rising", as I have seen done in Belfast, by means of which boats are enlarged by putting in new sections. I should like to see this credit scheme extended to other forms of

repair. I do not see why it should be limited to this one sphere.
If the Minister's aim in introducing this Bill is to assist British shipbuilders, all forms of modernising and repairing of boats should be covered, and it should be possible for British ship owners to apply for the same kind of assistance for such work, which benefits the shipbuilding industry directly but also benefits our shipping industry, because it improves our merchant fleet. It is a little late to do this in this Bill—we have heard that the money has already been used up—but I should like him to consider extending the terms for the future, not only in regard to time but in regard to the number of uses to which the money may be put.
My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) spoke of trade reservation and flag discrimination. These practices are widely adopted throughout the world and injure British shipping. I strongly hope that when the Minister takes action to assist British shipping he will assist not only the large shipowners who are running liners but the many small tramp owners. These vessels are very often engaged in carrying not British but foreign cargo from one foreign port to another foreign port, and earn a great deal of money for the Treasury in the process. It is most important that these shipowners, sometimes operating in a small way, should be given the same assistance when replacing their vessels as foreign tramp owners can obtain when ordering ships abroad, or even when ordering them in Britain.
I do not think that my right hon. Friend dealt satisfactorily with this point this afternoon. He said that the provisions laid down would come to an end in the spring of this year, but he did not give any indication at all that the credits given through E.C.G.D. to foreign owners building boats in Britain would come to an end at the same time. One of the points we argued a year ago in favour of this provision was that the British shipowner should not be put at a disadvantage vis-á-visthe foreign owner ordering in Britain. That argument is as true today as it will be tomorrow, and that fact alone is an overwhelming argument in favour of extending the provisions of the Bill. We are an island people and cannot neglect either our


shipping or our shipbuilding industries. The point has been made many times and does not need to be laboured, but I do not think that my right hon. Friend has given it proper weight.
I also support what was said by my hon. Friend the Member for Sunderland, South (Mr. P. Williams) about building boats powered by nuclear engines. Not only would we obtain operating experience by ordering such vessels but we would get operating "know-how". There is a great danger that our shipbuilding yards—with the exception of one that is engaged in nuclear submarine building, which is in a quite different category—will fall behind in the building "know-how" that is so essential if they are to remain in business for the rest of the century.
It has always rather surprised me, and here I agree with my hon. Friend the Member for Sunderland, South—though I do not wish to reflect on the Minister in any way—[Hon. Members: "Why not?"]—because that is the way I feel. I do not wish to reflect in any way on the energy and capacity of my right hon. Friend, but he has a great deal on his plate. We have a separate Minister of Aviation. Aviation is important, but surely shipping and shipbuilding are older and more important interests in Britain. I should like to see a separate Minister—with, perhaps, a separate voice in the Cabinet—to deal with these matters that are so vital to our country and to our prosperity. I hope that this point will be borne in mind by the Government, particularly in the changing circumstances of the coming year. I welcome the Bill, as far as it goes, but it is still lacking, and needs quite a lot of extension.

6.27 p.m.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): I should like to answer the last point made by my hon. Friend the Member for Belfast, East (Mr. McMaster) before I forget it. It has often been argued, not only by my hon. Friend but by other hon. Members, that there would be advantage in having aseparate Ministry of shipping, but I can assure my hon. Friend that a great deal of time is spent in the Ministry of

Transport on shipping matters by a whole section of the Ministry and by my right hon. Friend himself—I daresay as much as he spends on inland transport. This idea of having a multiplicity of Ministeries dealing with different topics has to be balanced against the advantages of any given interests, such as those of shipping and shipbuilding, being under a Minister who is in the Cabinet. My hon. Friend no doubt will agree that if there were Ministries for one thing and another we would end up with a Cabinet of about fifty Ministers.
We have had an interesting debate and, if I may say so, it started on a more acrimonious note from the Opposition benches than have previous debates on shipping and shipbuilding. I was glad to observe that, because I think that it reflects the better outlook for the shipbuilding industry. I think that is why the hon. Member for Sunderland, North (Mr. Willey) felt freer to lash out a little. We take that in good part, and perhaps I may say without impertinence that we very much appreciated the restraint shown by the Opposition a year ago, when the outlook for the industry was so very serious.
Naturally, most of the debate ranged over the future long-term prospects of the industry rather than the immediate effects of the Bill. I want to go back to both of these points, because while no one would deny that the long term matters more than the short term, at the same time it would be foolish to underestimate the good which has already been done by this scheme. Before coming to those points, I should try to answer specific matters raised in the debate.
The hon. Member for Sunderland. North began by accusing my right hon. Friend of speaking only platitudes and suggesting nothing constructive. Most of my right hon. Friend's speech was devoted to an exposition of the Bill, which was not unnatural since he was moving its Second Reading. The hon. Member then went on to claim that he had advocated a credit scheme in 1962. I recollect that he did, but I doubt very much whether a credit scheme at that time would have been effective, because the differentials at that time between prices in British yards and the prices of


our continental rivals were much greater than they are now and I do not think that a simple credit scheme would have done the trick.
The hon. Member repeated the old chestnut about our being the largest importer of foreign ships. He must realise that this is not so. He must distinguish between genuine British shipping firms whose orders abroad are negligible and other firms who legitimately, for reasons of their own, register in Britain but who actually buy ships abroad.
The hon. Member made a great deal of play about exactly what we mean by the contraction of the industry and the hon. Member for Greenock (Dr. Dickson Mabon) made the same point. The House will recollect that in March. 1961, we had the Report of the Dunnett Committee which made a very careful estimate of what the likely volume of annual orders would be for the British shipbuilding industry. We still see no reason to dissent from that estimate, and that is my answer to the hon. Member. The whole industry is familiar with the Report, and when we have been asked we have always told the industry that there is a long-term forecast of likely orders. We do not say that that forecast is right but we do not see that it can be improved as an estimate.
The only hint of policy that emerged from the speech of the hon. Member for Sunderland, North struck me as a desire for a very considerable degree of Government interference in the control and direction of the various activities of shipbuilders. Heaven help the industry and the men who work in it if a Labour Government embark upon such an enterprise. I find myself far more in agreement with the views of the hon. Member for Dunbartonshire, East (Mr. Bence) on this subject.

Mr. Willey: This is not a question of interference with or direction of the industry, but of whether we have a sense of national planning and whether the industry has a pretty clear idea of where it will stand in three or four years' time. Almost every country with which we are competing has such a conception and the shipbuilding industries of those countries do not hesitate to go to their Governments. When the hon. and gallant Gentleman talks about the

flexibility of labour, I must tell him that we shall not have that flexibility until there is a sense of an established labour force.

Vice-Admiral Hughes Hallett: The only countries of which I can think offhand that can give their industries a fairly accurate forecast of the size of their merchant fleet, and consequently of building orders, are those countries which operate their shipping with a very heavy subsidy. What the hon. Member says would be true to a certain extent of the United States but in countries which operate a free shipping service it is very difficult to forecast with any certainty.
My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) suggested that many of the orders placed under this scheme might have been placed anyway. I do not dissent from that, but I ask him as a shipowner himself whether he can place his hand on his heart and say what orders would have been placed in this country had it not been for this credit scheme. I have an uneasy feeling that many of the orders might have gone abroad.
Arising from the same point, my hon. and gallant Friend made great play of the better credit facilities for export orders enjoyed by foreign shipowners when they come to order ships in this country. Incidentally, he was wrong to say that these better facilities are provided by the Government. They are provided by financial institutions in the City. The apparent anomaly arises from the world-wide competition to offer special export credit facilities and other export facilities. A Japanese shipowner would make exactly the same complaint in his own country, because he would find that the rate of interest for borrowing is different and the price he pays for steel is different from that which the non-Japanese shipowner pays if he orders in Japan. This is not done by subsidy but by private arrangements within the banks and within the industry.
The hon. Member for Greenock went rather wide in the debate and eventually his discourse on shipping was stopped. I cannot follow it in detail, but I would reply to his remarks on our shipping policy by saying that he should calculate,


if he can, the consequences of this country going back to a policy of protection. He should ask himself whether the united stand now taken by this country and, largely under the leadership of this country and my right hon. Friend, by other great European maritime nations together with Japan, is not a better policy.

Dr. Dickson Mabon: The fact is that we are losing this battle steadily and by not having reserve retaliatory powers we are demonstrating to the world that we have no intention of fighting; Britain will not flex her muscles in this respect.

Vice-Admiral Hughes Hallett: This is a matter in which not only this country but all our friends in Europe find it difficult to go further than we are going now. I do not think it would be to the advantage of the shipbuilding industry, indirectly, if we found ourselves eventually forced to go back to a policy of protected shipping.
The hon. Member asked whether the Bill might not have been made an instrument for finding money for nuclear propelled ships and nuclear research. No doubt it could have been, but we do not think that that would have been appropriate. The Bill was drawn up with a very narrow object in mind which has largely been achieved. The hon. Member went on to suggest that just as the Piercy Committee had been able to look into the managerial efficiency and credit-worthiness of shipowners who apply for loans, a comparable committee should inquire into the whole state of the shipbuilding industry. My answer is that we have had quite a number of inquiries recently.
We had the Dunnett Committee in which both sides of the industry and Government officials participated. We had the D.S.I.R. Report on the industry's research needs, which the hon. Member will remember created a certain amount of excitement and furore when it was issued, and we had an investigation carried out by Peat, Marwick, Mitchell & Co. into the reasons why orders were being placed abroad. We had also the industry's own productivity report, the Patton Report. I do not think that a further inquiry would have thrown much more light on the general state of the industry.
My hon. Friend the Member for Sunderland, South (Mr. P. Williams) welcomed the Bill and laid stress on the need for better labour relations, with which I wholly agree. Referring to the new Cunarder, he asked whether Cunard might help the firm which would have got the order under the old scheme by not being required to put out a competitive tender, but merely to go back and place the order on the Tyne. As I understand it, the consortium which made the tender on the Tyne has not finally decided whether to tender or not. But supposing it does. It does not necessarily follow that it will win the order. A great deal has happened in the way of modernising other yards since the previous tenders were put in. Furthermore, my hon. Friend asked why firms should waste money by putting in tenders which they are not certain to win. They are under no obligation to undertake expensive tendering at all.
My hon. Friend went on to say that shipbuilding orders were not profitable, and I agree. They are not always profitable, and I shall refer to this matter later. My hon. Friend made suggestions which we shall study, and he asked specifically whether we could assure him that when trade treaties are signed the shipping and shipbuilding industries in this country are taken into consideration. I assure my hon. Friend that they are. My right hon. Friend is invariably consulted, and wherever it is practicable and appropriate such safeguards are written in.
The hon. Member for Jarrow (Mr. Fernyhough)—I think very rightly—at the beginning of his speech stressed that it was important for the happiness and efficiency of the industry to ensure that the people who worked in it had a feeling of security. His hon. Friend the Member for Dunbartonshire, East made very much the same point. The hon. Member for Jarrow gave the example of the sad scenes which occur when a ship is launched, when a large number of steelworkers are paid off that same evening. Curiously enough, his hon. Friend gave the reverse example of a large number of men in finishing trades being paid off until the next ship was on the stocks, when they would be taken on again.
Surely those are striking examples of the advantages of the Continental and


Japanese systems of greater flexibility of labour, where the men are trained and able to carry out more than one job? Although it may not give complete uniformity, none the less it greately reduces these fluctuations, and is one reason why greater security is possible.

Mr. Fernyhough: The incident which I mentioned showed that all the people who have been employed on building that ship walked off the yard and did not know when they would come back, because they would not be able to return until a new ship was on the stocks.

Vice-Admiral Hughes Hallett: I do not accept that. It is true that if there is a period when no ships are being built the number of men employed in the yards is small, but if the men who have been helping in the finishing stages of the ship are also capable of being employed in the earlier stages when she is on the stocks, obviously the gaps in employment and the fluctuations in the way various trades are employed will be very much less. I think that that is a statement of the obvious, and that no one would dispute it. The argument that has been put forward from time to time against this flexibility is that it is impossible for a man to be fully skilled in more than one trade at a time. All I can say is that it is done in other countries, and I cannot believe that our people are of a lower standard. However, I shall come back to this subject later.

Mr. Bence: I made the statement about people employed in the finishing trades. There are many functions in a shipyard where there is flexibility and the men can be moved from one operation to another, but the hon. and gallant Member must not ask plumbers to go up aloft and work on the layout, because they do not know the first thing about it. They are plumbers. They can do a variety of plumbing jobs, but we must not ask carpenters and joiners who build ships' furniture to try to weld plates, because they know nothing about that job. The hon. and gallant Member must not stress flexibility to that extent. He must not expect artificers to be first officers on the bridge, because it is not possible to stretch flexibility that far.

Vice-Admiral Hughes Hallett: It is always possible to give extreme examples, but the fact remains—and it

is no good our ignoring this—that a remarkable degree of interchangeability is achieved in foreign yards, and if the hon. Gentleman had been with my right hon. Friend and me when we visited some of these foreign yards I think that he would have been surprised. I certainly was.
My hon. Friend the Member for Belfast, South (Mr. Pounder) began by saying that he thought the timing of this Measure was correct. I was glad to hear him say that, because I am sure that he is right. I am prepared to concede that there may have been a certain element of luck in that the timing fitted in so well with the needs of the industry, but I am sure that the timing was right.
My hon Friend went on to remind us of the great benefits which the firm in which he is interested, Messrs. Harland and Wolff, has gained from rationalisation, or modernisation. In that case the two words really apply to the same process. I agreed with a great deal of what my hon. Friend said about the various measures that were needed to make the industry more competitive. I also agreed with him when he called attention to the difficulties facing some of our foreign competitors as well as the difficulties facing this country.
My hon. Friend was followed by the hon. Member for Dunbartonshire, East who followed up my hon. Friend's last point by reminding us that the industry is a great deal more efficient than it is often painted, and that cannot be said too often. We rightly concentrate on weaknesses in the industry, because we are trying to give a lead to improve it, but there are great areas where the industry is fully competitive with any other country in the world.
The hon. Gentleman went on to point out that the function of the Government was not to create prosperity but to give a lead and create the climate in which it can come. He asked whether we had power under the Bill to impose standardisation, to give directions as to where orders should be placed, and so on. There are no such powers in the Bill, and I assure the hon. Gentleman that this Government at any rate would never dream of embarking on any enterprise of that nature. In fact, I cannot think that any Government would. After all, even in the nationalised industries


one does not interfere in that sort of thing. It is regarded as part of the commercial judgment of the board which runs the industry.
My hon. Friend the Member for Belfast, East suggested at the beginning of his speech that most countries give assistance to their shipbuilding industries. Certainly some do, and I assure my hon. Friend that there is no lack of study of the subject by the Government. But the countries that give assistance are not very important in the context of what we are discussing today. The two dangerous competitors are Sweden and Japan and their industries are not directly assisted by the Government; at any rate, not to any appreciable extent.

Mr. McMaster: My hon. and gallant Friend referred to the fact that Japanese shipping was assisted by the steel subsidy. Has he taken account of the fact that cheaper steel is provided for ships that are built for export?

Vice-Admiral Hughes Hallett: That is not a subsidy by the Government. It is an arrangement between the Japanese shipbuilders and the Japanese steel companies. It is an arrangement within the industries.
That brings me to my hon. Friend's intervention on the question of steel, on which the hon. Member for Sunderland, North, my hon. Friend the Member for Sunderland, South, and the hon. Member for Dunbartonshire, East spoke at great length. The facts are that the price of steel accounts for more than 20 per cent. of the cost of producing a big tanker.
It is true that our shipbuilders have been worried about the prices that they have had to pay for steel, because the shipbuilders of Japan and Sweden have been able to get it more cheaply—just how much more cheaply it is not easy to establish. One sometimes hears the most sweeping statements about price differentials between one country and another, but on investigation they turn out to be based not on ruling prices but on prices for job lots or, at any rate, comparatively small quantities—too small to affect the average price.
Nevertheless, it looks as if the Swedish yards have been able to get their steel at prices far below that which our builders have to pay to account for a difference in the cost of a tanker of between 30s. and 35s. per dead weight ton, according to our calculations. That is a serious matter. It is not a negligible proportion. It works out at about £80,000 on a 50,000 ton dead weight tanker. The Japanese also have some advantage in this regard in respect of the ships they build for export, but it does not appear to be so great as in the case of Sweden.
Our maximum steel prices are fixed by the Iron and Steel Board. The heavy steel makers have agreed among themselves to charge their customers these maximum prices, and these agreements are coming before the Restrictive Practices Court, starting in April. The shipbuilders are at present considering the nature of their evidence. I shall say no more than that tonight.
Dr. Dickson Mabon: In the hon. and gallant Member's illustration concerning Sweden, what is the practice under E.F.T.A.? Is there anything in the E.F.T.A. Agreement which may shake the position of Sweden or affect our own?

Vice-Admiral Hughes Hallett: I do not think that Sweden is doing anything outside the terms of E.F.T.A. It is not a question of subsidy, or anything like that. Although important, the steel question must not be exaggerated. I went to a Swedish yard a few months ago and I found there was no cheap steel there at all at that time.
I now want to say something about the short-term effects of the Bill. I feel that the House has not entirely appreciated the magnitude of the change which took place in 1963. At the risk of boring the House I want to give one or two figures again. A year ago the total on our order books, including all work in hand, stood at just over 2 million tons. Six months ago it had fallen to 1·8 million tons. Today it has risen, and stands at 2·4 million tons. During 1963, at total of over 1½ million tons of orders was booked, of which about 41 per cent.—about 640,000 tons—was under the aegis of the Government credit scheme. It is clear that


there has been a dramatic upturn in the immediate outlook, but, as the figures show, it would be wrong to ascribe it all to the influence of the credit scheme.

Mr. Fernyhough: I understood the Minister to say in his opening speech that orders under the credit scheme amounted to 850,000 tons.

Vice-Admiral Hughes Hallett: That is the total, but it has not all been placed in 1963. Some orders are still to come.
The first reason why the position of the industry has improved is that it has become more competitive, especially in respect of the more complicated vessels, such as passenger liners, specialised bulk carriers, dredgers and so forth. This was shown clearly in the first quarter of 1963, before the credit scheme took effect, when there were 400,000 tons of orders, 42 per cent. of which was for export, on foreign account.
Secondly, the credit scheme itself has achieved almost exactly what was intended. Thirdly, freight rates have recovered a little from the disastrous level to which they fell during the shipping slump. This has encouraged the more enterprising shipowners to feel once again that shipping services may become profitable, especially for new and more economical ships.
To this I must enter one caveat. Shipbuilding prices are still abnormally low, and we are far from satisfied that the orders placed in 1963 will yield a margin of profit sufficient for the health of the industry. Yet the orders are very much welcomed for the employment they produce in regions where the main industry is bound up with shipbuilding.
In this connection I want to say a word or two about the effect on employment, which goes some way towards justifying the Bill. About 1,200,000 tons of merchant ships are under construction, and 58,000 people are engaged in shipbuilding at this moment. The last time when the volume of work under construction was as high as that was in the summer of 1962, when we had 66,000 men in the industry. These figures suggest that there has been an improvement in productivity, and we all know that there has been an increase in the speed of building. This, by itself, means an increase in productivity. Also, a

faster stream of orders is needed to keep a given labour force in steady employment. That is what modernisation is about. It is at once a reason and a justification for the £150 million spent by the industry in making some of its shipyards up to date. Had this not been done, orders would have gone abroad, and no amount of credit schemes would have saved the industry.
In forecasting how employment in the yards is likely to be influenced by the credit scheme we have made some allowances for increased productivity. My right hon. Friend has indicated that later this year we expect to have about 1½ million tons of commercial vessels under construction, giving employment to about 70,000 men. Here again, there is an interesting comparison to be made. The last time that the level of activity was as high was in the middle of 1961, when about 80,000 men were employed.
Another consequence of modernisation is that it augments the immense surplus of building capacity of the whole world, and the substantial surplus in this country—by how much is a matter of argument. But it would be unrealistic to imagine that every yard in the kingdom is likely to be fully occupied again.
This brings me to the second lesson, that when an old-established firm goes out of business—painful though it is—it is a mistake to imagine that this is a bad thing for the industry as a whole. As my right hon. Friend indicated, some rationalisation is necessary if costs are to be kept to the minimum, and one form which rationalisation commonly takes is the closure of some yards so that others can work at full capacity. In this connection I repeat that the volume of employment is determined by the size of the total order book and not by the way in which it is divided between different yards.
The livelihood of the workers can be secured only if they are employed in highly efficient and up-to-date yards. How secure will their employment be then? That is the great question, on the answer to which will depend the ultimate justification for the Bill. We wanted to give the industry a breathing space, not for the Government to breath down its neck but rather for its leaders to take stock of their position and to do what needs to be done to bring


their costs into line with those of their foreign competitors.
As to prices, let us be careful not to equate them necessarily with costs. The facts have to be faced, and the position is fairly clear. There is nothing secret about it. We are least competitive when it comes to building the very large and simple vessels, such as tankers and bulk carriers. Our most formidable European rival is Sweden, and from all the information which the Government have been able to glean—most of it being published information—Swedish prices are anything from £5 to £6 lower per deadweight ton than our own, and Japanese prices are more like £10 lower. In terms of percentages that means that the prices are over 10 per cent. lower in Sweden and nearly 20 per cent. lower in Japan.
Many reasons have been advanced to account for the differences, but this is not the occasion to go into them. Nevertheless, I can assure the House that the industry is using the time bought by this Bill to explore them with great care, and it is keeping us informed of its findings. We are satisfied that there is no fundamental reason why our industry should not be able to match Swedish prices. There cannot be any reason. That is why it would be wrong to go on supporting the industry indefinitely in some special way, such as by this credit scheme. The remedy is in the hands of those on both sides of the industry and it seems probable that the greatest single contribution which could be made would be through the more efficient employment of labour. That has been said at intervals for years. But its truth becomes even more apparent the more one analyses and compares our position with that of other countries.
I am not thinking only of demarcation. The first requisite is that work should be carefully planned and well organised day by day. That is rendered immeasurably easier if demarcations are neither too numerous nor too rigid. Japan is a tougher competitor. Japanese labour is not only highly efficient, it is also cheap. I am not saying that this accounts for all the difference in price, far from it, or even that it accounts for most of the difference. But it is

probably the most important single factor and I therefore suggest that the best single step which the industry could take, in return for what Parliament is doing for the industry in passing this Bill today, would be to reach agreement, at long last, on the more efficient training, organisation and employment of shipyard labour. With this thought I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Rees.]

Committee Tomorrow.

SHIPBUILDING CREDIT [MONEY]

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 88 (Money Committees).

[Sir ROBERT GRIMSTON in the Chair]

Motion made, and Question proposed,

That, for the purposes of any Act of this Session to enable the Minister of Transport to make loans for the purpose of providing finance for the construction or alteration of ships in shipyards situated in the United Kingdom, any of the Channel Islands or the Isle of Man and the equipment of the resulting ships, it is expedient to authorise—

(a) the issue out of the Consolidated Fund of sums not exceeding seventy-five million pounds to enable that Minister to make loans under the said Act;
(b) the borrowing of money for the purposes of the said Act in any manner authorised under the National Loans Act 1939;
(c) the payment out of money provided by Parliament of any administrative expenses incurred for the purposes of the said Act by that Minister and any sums required by him for making repayments of fees and other incidental sums received by him in connection with loans made or to be made under the said Act;
(d) the payment into the Exchequer of any sums falling to be so paid by virtue of the said Act, and the re-issue out of the Consolidated Fund of such of those sums as fall to be so re-issued by virtue of the said Act.—[Vice-Admiral John Hughes Hallett.]

7.5 p.m.

Dr. J. Dickson Mabon: I should like to ask the Minister to clarify the content of paragraphs (a) and (b). During the Second Reading debate


on the Bill it was mentioned that most of this money had been disbursed in one way or another. I should like to have that specifically stated so that we know what is left. I wish to know how much remains of applications pending to 31st May, 1964, which could aggregate to this sum, or near to it. It is my view that the Money Resolution is drawn too tightly and may make nonsense of some of the applications which are outstanding, or the discharging of the duty which it was the intention of the Minister to achieve
Regarding paragraph (b) I wish to know whether it is the intention that it is to be included under paragraph (a). If this is a misunderstanding on my part, I should be grateful if I may be told to what extent money borrowed for this purpose can come under the National Loans Act in addition to the £75 million laid down in Clause 1(6) of the Bill. This is very important in relation to the possibility of amending the Bill. I should be grateful if the Minister would answer the points which I have raised.

Mr. Bruce Millan: I wish to support what has been said by my hon. Friend the Member for Greenock (Dr. Dickson Mabon). We wish to know whether this Money Resolution is so tightly drawn that there may well be virtually nothing to discuss during the Committee stage. As was made clear during the Second Reading debate on the Bill, a number of hon. Members would like the Government to spend sums of money additional to the £75 million at present provided for in the Bill which, as the Minister has told us, has already largely been spent.
It seems clear from the content of paragraph (a) that if the Resolution is passed as it stands it will not be possible for us to move Amendments to increase the sums of money paid under the Bill during the Committee stage discussions, because the Money Resolution providing for £75 million, which is the sum provided for in the Bill, will effectively prevent discussion on this point. I repeat that it is virtually the only point which would be worth discussing during the Committee stage. I wonder, therefore—if that is the case—whether under paragraph (a) it would be possible nevertheless to discuss the kind of thing

which I have mentioned, because of the provisions of paragraph (b) which seem to give some additional power to the Government beyond the £75 million. If paragraph (b) does not do that, it is not clear to me what it does do.
It is rather interesting that the money has been spent without there being any legislation it all. It has been possible for the Government to commit themselves to spending £75 million without coming to Parliament for approval. The Government having done that, I think that it would be more than ironic were the Money Resolution so tightly drawn that we should not be able during the Committee stage of the Bill to press on the Government the necessity to go beyond a figure of £75 million. In this case the Government will have had it both ways. They will have spent the money on their own determination before getting Parliamentary approval, and then on coming to Parliament for approval, they will have drawn the Money Resolution so tightly that we shall be hamstrung when it comes to putting suggestions to the Government for improving the sums of money going to the shipbuilding industry under the terms of the Bill.
I hope that that is not the way in which the Money Resolution has been drawn, but it appears to be so from the content of paragraph (a). I hope that the Minister will be able to assure us that it is not the case, and that under paragraph (b), or in some other way, additional sums of money may be available, if the Government wish to avail themselves of the opportunity of extending the scheme. In that case we could have a much more fruitful discussion during the Committee stage.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): I must confirm the worst fears of the hon. Member for Glasgow, Craigton (Mr. Millan). He has correctly read the Money Resolution. The only term on which he was incorrect—as a matter of fact he corrected himself—is that none of the money has been spent yet, in the sense that the loans have not been made. The loans fall to be made when the ships are finished.
This Bill gives legal authority to do what was announced by my right hon. Friend in two separate announcements in


this House. I suggest that the time to propose larger sums of money would have been then—either by a Motion or by a Resolution or some other means—and not now. My right hon. Friend made a clear statement of policy concerning the limits to be placed on these loans. Paragraph (b) will not help the hon. Gentleman to increase the amount being lent for this purpose, because it refers to Clause 2(2) of the Bill and authorises the usual procedure which is observed by the Treasury in providing sums to meet issues out of the Consolidated Fund.
The hon. Member for Greenock (Dr. Dickson Mabon)—unless I misheard him—raised a question about paragraph (d)—

Dr. Dickson Mabon: No.

Vice-Admiral Hughes Hallett: In that case I misheard him and I will say no more.

Dr. Mabon: I did not raise any point about paragraph (d). But may I be contented by getting an answer to my original question about paragraph (a)? How much money has been committed already? How much money would appear to be, or could be, committed in applications until 31st May, 1964? This is highly relevant in relation to whether the Money Resolution is wrongly drawn.

Vice-Admiral Hughes Hallett: I cannot state precisely the sum committed at this date because I do not carry it in my head, but I can assure the hon. Member that the greatest care will be taken by the Department, and especially by its accounting officer, to ensure that more money is not committed than the sum mentioned in the Bill. On the other hand, we shall equally try to ensure that as near as possible the full sum is committed.

Mr. Millan: Under what authority has the money already been committed? Are the Government legally committed already to giving loans up to £75 million? What happens to that commitment if the Government do not get the Bill?

Vice-Admiral Hughes Hallett: In the hypothetical case of the Government not getting the Bill, I have no doubt that the money would have to be raised

above the line on a Ministry of Transport Vote. There is a certain amount of Parliamentary sanction. This point was raised at the time my right hon. Friend made the announcement about the loan. It was pointed out that an item was included in the Ministry of Transport Supplementary Estimate which covered the administrative expenses of the scheme, and in passing that, Parliament legalised the procedure under which the commitments have been entered into.

Mr. William Ross: We have heard some rather strange prognostications about what may happen if we do not pass the Bill. If we do not pass the Money Resolution, what chance would there be of having a Supplementary Estimate or some sum included in the Ministry of Transport Estimate being accepted by the House?
It is interesting that the last Money Resolution of this kind that we had was in respect of a ship which was never built. Now we have money committed but we have not the authority to spend it. We have not got the ships yet, and I wonder whether we are likely to get them. There may be doubt, certainly at the moment, whether the money will be available.
I am interested in this from the point of view of procedure. The Government could very well have permitted flexibility in the Money Resolution in the interests of hon. Friends of mine from Clydeside and elsewhere in Scotland who are anxious to have a greater measure of generosity from the Treasury and the Ministry of Transport in regard to the shipbuilding problem. If the Government had allowed more flexibility, it would have enabled my hon. Friends to seek amendment of the Bill. But the way this has been done means that, although we could amend the Bill as much as we liked and extend the provisions in connection with the kind of ships which can be built, the sizes of ships and so on, or limit the provisions, we cannot get any more money.
This makes a farce of the process of legislation in Committee. It means that the Minister can say, "I shall virtually be able to get the Committee stage through in record time." That will please the Chief Whip and his minions because it will mean less trouble for them, but


it is rather unfair in view of what has been said in this debate about not enough money being made available and the time limits being inadequate to the problem which the yards are facing.
7.15 p.m.
It is not right for the Parliamentary Secretary to say that this is in the usual form and the Treasury has accepted it. I do not see any Treasury Minister present who is prepared to defend it. It is not for the Minister to defend it; it is a matter for the Treasury. We ought to insist upon someone from the Treasury being present. Are the Government convinced that this is the limit to what they can get from the Treasury? Ought they not to unburden themselves and tell us why the sum is limited to £75 million? We are entitled to an adequate explanation why they have tied themselves to this sum. There seems to me to be no reason why the Minister should not withdraw the Money Resolution and do battle with the Treasury to get more money and allow greater freedom of discussion in Committee. That would be reasonable in the light of the arguments which have been put forward.
I was interested in the remarks made about a Supplementary Estimate and a sum being included in respect of this. I presume that the Supplementary Estimate has already come before the House and that the House has accepted it. But, according to paragraph (c), we are being asked once again to authorise the payment out of money provided by Parliament for any administrative expenses incurred for the purposes of the Act. I presume that this is something which we have already provided for, according to the strange statement made by the Parliamentary Secretary. Presumably we are committed to spending money without any authority at all. Then we are told that we already have authority in respect of expenses, and now we are asking for it again. The Ministry of Transport has some strange ways.
If the Minister of Transport would like to clear the matter up, we should be glad to have the information. Can he tell us what the administrative expenses are likely to be? Could he tell us what sum will be required by him for making repayments of fees and so on in connection with the repayment of loans? What fees are these, and how much is

involved? If we could have a breakdown of the moneys involved in paragraph (c), we could see more clearly whether or not the Parliamentary Secretary's statement about these things being already covered by a Supplementary Estimate was accurate.

Mr. Frederick Willey: We are greatly obliged to my hon. Friends for raising a matter of considerable importance if we are to exercise the rights of the Committee in financial matters. We are in very real difficulty here. The right hon. Gentleman originally suggested £30 million. We understood that in due course we should have an opportunity to debate the matter. The £30 million was the right sum. Later the figure became not £30 million but £60 million. Later it became not £60 million but £75 million We have every right to challenge the right hon. Gentleman's judgment. Clearly he was wrong—

The Minister of Transport (Mr. Ernest Marples): Perhaps I may make that point clear. When I first announced the £30 million, I said that we would see how it went and if it proved to be insufficient we would increase it. It was the same with the £60 million. But I said that the £75 million was the final figure.

Mr. Willey: I am merely expressing the opinion that the right hon. Gentleman's judgment was not final. He expressed it to the House as not being final. Obviously, his original guess was hopelessly wrong. When he suggested £30 million, he indicated to the House that that was about right.

Mr. Marples: No.

Mr. Willey: I appreciate the right hon. Gentleman's difficulty now. I am trying to help him. If he does not want to be helped he will not be helped. He is very stupid. He has a habit of upsetting the House quite unnecessarily. I will tell him what the difficulty is if he does not appreciate it. If there is any suggestion that this is not the final figure it will affect orders being put in because British shipowners will hold back, thinking that the figure may be revised. That is why the House should have an opportunity thoroughly to discuss this matter. We want to know what the figure is. That is why we want a


debate now. I referred earlier to the president of the Shipbuilding Conference who suggested that the sum was probably not right. We want to know whether it is right or not.
I am not unappreciative of the right hon. Gentleman's difficulties even if he himself does not appreciate them. At any rate, this is a greater reason for our trying to obtain a debate in order that we may discuss the matter now. We have reached the figure of £75 million which, incidentally, includes the Cunard project which we have not discussed. In fact, we have not discussed this sum on Second Reading. This is really a Committee point. One would accept that it was right to discuss the £75 million and the build-up of the £75 million, and, in particular, the money for the Cunard project in Committee.
I want some assistance from the right hon. Gentleman. I say that he is stupid because he ought to appreciate that he owes the Committee an explanation on this point. I should have thought that he would have been willing to accept the responsibility for seeing that in one way or another we could discuss it in the Committee stage of the Bill. I do not think that this is raising a matter which is unimportant. On the contrary, it is of considerable importance. I also think that it would assist the Minister and the Parliamentary Secretary if we reached some finality about it, if we felt that it had been discussed and we had reached the conclusion that in present circumstances this was the right sum. The point having been raised, I hope we shall have some co-operation in ensuring that we shall have an opportunity to discuss the £75 million sum later in our proceedings.

Vice-Admiral Hughes Hallett: I thought we had had a very considerable discussion over the last few hours on whether the scheme should be terminated now or extended. A great deal of the debate has ranged over that subject. If there is any doubt left about whether there is finality over this sum or not, I should have said that it is no fault of the Government side. My right hon. Friend and I have made it quite clear that we do not think it proper to continue the scheme beyond the present level, and that is why we

have published the Bill with the £75 million in it. That was a clear indication to the whole industry that the credit scheme had now reached its limit from the Government's point of view.
The matter raised concerning paragraph (c) is one of rather greater complexity. The administrative expenses, in so far as they involve Ministry personnel, are borne on the Ministry of Transport Vote, Class IV, Vote 10. The work of the Ship Mortgage Finance Company, which is employed by the Advisory Committee to act as its agent to go into all this, will have been completed, we estimate, by the end of the current financial year. We also estimate that the fees of the Ship Mortgage Finance Company and any expenses which the members of the Committee might claim—I understand that none has been claimed up to date—will have been paid this year and the charges will have been borne on the Transport (Shipbuilding Loans) Vote, the Vote which appeared on the Supplementary Estimate for the first time shortly before we rose for the Summer Recess. That Vote will lapse after 1963–64 because these fees and expenses, if any, will by then have been paid.
I was asked whether I could say what the total expenses would be. I cannot give the figure offhand, but I think the amount will be well under £100,000 for the entire scheme from beginning to end.

Mr. Millan: In the last paragraph of the Explanatory Memorandum, the figure of £280,000 is given. How does that compare with "under £100,000"?

7.30 p.m.

Vice-Admiral Hughes Hallett: It arises from a different source altogether, I was about to explain that under the terms of the loan the shipowner borrowing has to pay an engagement fee of three-eighths per cent. on the value of the loan and a commitment fee of 1 per cent. on the total amount of the loan. These fees are paid immediately the acceptance of the loan offer is made. The engagement fee of three-eighths per cent. is retained by the Government, the object being to repay administrative costs. The commitment fee, on the other hand, is repayable to the borrower provided that he does not fail to honour his agreement to take up the loan. In


other words, it is repaid at the time the loan is made.
The moneys received from borrowers by way of engagement and commitment fees have been credited to the Appropriation-in-Aid of the Transport (Shipbuilding Loans) Vote, 1963–64. Provision for the repayment of the commitment fees will be made in the Transport (Shipping and Special Services) Vote for 1964–65 and thereafter.
The engagement fees which are being paid will reach about £280,000 and should be more than sufficient to meet all the administrative costs, including, incidentally, the fees paid to the Ship Mortgage Finance Company. It is not the Government's intention to refund any proportion of the engagement fees which may eventually be found to be in excess of the actual administration costs.
This is a matter which could be raised when we reach Committee, but it is not our intention to refund this money because the administration costs over the next 12 or 14 years, when the scheme requires administrative work, are not easy to estimate with any accuracy. Furthermore, we have made no financial provision at all for bad debts in calculating the lending rate of interest. The lending rate is the minimum Government lending rate. We think that any margin in the £280,000 could justly be retained as some small offset against that risk.

Dr. Dickson Mabon: Is it not unfair that the hon. and gallant Member should be able to say all that about paragraph (c), which covers barely £500,000, and yet be unable to tell us anything at all about paragraph (a), which concerns a figure of £75 million? He says that he does not carry that in his head. He did not carry the other information in his head, either; he carried it in his brief.
The whole burden of my inquiry rests upon whether that figure is adequate. Are we not entitled to be told the breakdown of the commitments into which the Government have already entered within the £75 million? One of my hon. Friends said that these commitments involve £17 million—I do not know whether the figure is accurate—for the Cunarder. How much has been committed in actual contracts and how much is in the so-called pipeline? We are entitled to

know those figures. If the Government cannot provide us with essential information on paragraph (a), then the Financial Resolution ought to be withdrawn and resubmitted

Vice-Admiral Hughes Hallett: I do not understand the hon. Member's argument. The reason I spent some time on paragraph (c) was that I was asked about paragraph (c) and I did my best to reply. Although the sums involved are relatively small, they are rather more detailed.
The question which he asked me, and which I did not answer offhand, was how much of the loan money had been committed to date. I now have a note of the exact sum, but if I may say so, it is quite irrelevant to the matter and I am not at all sure whether I shall not be ruled out of order if I give it. At the moment it is £73·8 million.
What I have told the Committee is that we intend eventually to commit the full amount allowed for in the Bill and the Money Resolution. As I understand it, it would not be in order to move Amendments to that figure in Committee, but, unless I am very much mistaken, it is not out of order in Committee to discuss the exact way in which the moneys have been divided up.

Dr. Dickson Mabon: We have now extracted from the Minister—and I am sure, Sir William, that you are as glad as I am—that the commitment is £73·8 million, which leaves a balance, if the Committee agrees to put the figure at £75 million, of £1·2 million. That is the margin of our manœuvrability. It is not a very substantial margin. How much of the £73·8 million is involved in the commitment to the Cunarder? We are entitled to know, because it is very relevant to the full assessment of this so-called short, sharp help to the industry.

Vice-Admiral Hughes Hallett: The figure has been stated publicly. It is between £17 and £18 million, which is included in the £73·8 million. That loan has been accepted by now. As to whether we go any further, I think that it would be in order, if the hon. Member wished, in Committee, to move that the scheme be halted at the present stage.

Mr. Ross: We are told that the maximumis £75 million and that 73·8 million has been committed, leaving a margin of £1·2 million. The Minister told us that it includes something set aside for a Cunarder which is to be built on the Clyde. [Interruption.] If it is not to be built on the Clyde, then we shall speak a long time tonight. The Minister gaily tells us that that figure is between £17 million and £18 million—a margin of £1 million.

Vice-Admiral Hughes Hallett: I never rely on my memory in these matters and I do not carry all these figures in my head. I am not as clever as is the hon. Member in this respect. The sum, in fact, is almost exactly £17 million.

Mr. Ross: Is it exactly £17 million or between £17 million and £18 million? One is not required to be clever in order to ask a Minister for information which, if he is properly briefed, he ought to have. When a Minister asks the Committee for authority to spend £75 million he ought to be able to tell us exactly what he wants it for and to break the figure down for us.
I do not know whether the hon. and gallant Gentleman has attended many debates on Money Resolutions. Certainly in the not very distant past Ministers were kept at the Box for a long time to satisfy the Committee on such sums of money. Some of his hon. Friends who make speeches outside the House on money matters are never here when it comes to the point at which we can control expenditure. They are never here to use the opportunity which is available to find out exactly what has happened. We can do with a little less of the hon. and gallant Gentleman's sarcasm about how clever we are on this side of the Committee or any other side. He has to justify to the Committee the authorisation of this sum of money. We ask him reasonable questions and we expect a reasonable reply.
It is clear that the Government are not leaving much margin for manœuvre. It is not the first time that we have had miscalculations in the Government's estimate of the cost of a project. I was looking today at a comparison between the cost of the repairs to Downing Street and the original estimate. I hope that there has been no miscalculation about

the cost of some ships. If there has, £75 million will not meet the need.

Vice-Admiral Hughes Hallett: That is entirely incorrect. It would not matter how much more a ship cost. That would not affect the amount of the loan. The one figure which I am required to make clear at this stage is the maximum limit for which the Financial Resolution asks, which is £75 million. If the hon. Member is right in thinking that the debate on the Financial Resolution is the correct time at which to itemise the way in which all the proposed loans will be given, then all I can say is that I was under a misapprehension. I did not think that it was an appropriate time to itemise the way in which all the loans have gone. The total figure for which we are asking in the Bill is £75 million, and we shall not exceed that figure.

Mr. Ross: It is not a case of the hon. and gallant Member promising the House that he will not exceed the figure. Under the constitution, if the Financial Resolution is passed he cannot exceed it.
I do not know whether he appreciates that we on this side of the Committee have had some experience of Money Resolutions and know how far we can go in the debates. The hon. and gallant Member will be amazed how far we can go about the £75 million. I could ask whether the shipbuilding yards in Scotland were getting a proper share of the £73·8 million at present committed and refuse to pass the Money Resolution until I was satisfied. I could ask him—and expect a reply—how much of it has been committed in respect of ships to be built on the Clyde. If I am not satisfied, it is open to me to oppose the Money Resolution. If I feel that we are not getting our fair share for the shipbuilding industry on the Clyde, I can oppose the Money Resolution.
It may be a pity that the hon. and gallant Member has been landed with the responsibility for the Money Resolution. It is not the first time that I have complained that the name of a Treasury Minister appears as sponsoring a Money Resolution and then it is left to the Parliamentary Secretary dealing with the Second Reading of the Bill to give mumbled answers from a brief which he is probably reading for the first time.
In view of the history of this matter related by my hon. Friends, I think that the Government are wrong to tell the Committee that they are putting this figure in the Money Resolution and that we cannot alter it—that we can talk until we are blue in the face but it will have no effect because the Money Resolution has been passed by the Committee and no Amendment to it can be discussed. We could put down all the Amendments we like, but they could be ruled out of order because they conflicted with the Money Resolution, and it would simply be a matter on Second Reading of voting for or against a figure of £75 million with no scope for upward amendment.
I am not satisfied by the explanation given about this figure. If we pass the Money Resolution, the figure of £75 million is final. We may deplore it in Committee but we shall have no opportunity to do anything about it unless we persuade the Government to take away the Money Resolution and to return with one which will enable them to bend to the persuasions of hon. Members from both sides of the House that it may well be desirable to have a higher figure. It may be that my hon. Friends should continue the persuasion now. I am far from satisfied either with the hon. and gallant Member's replies or with the rather fractious way in which he suggests that we should not raise these matters at all.

Mr. Cyril Bence: I am grateful to my hon. Friends for raising a point which I had not noticed. During the last General Election in Scotland the Prime Minister made a statement promising the replacement of the Queens, and as a result a Bill was passed by the House. I well remember the Bill. We passed the Money Resolution providing £18 million advance to the Cunard Company to build a new Cunarder. That is now an Act of Parliament. It has never been repealed. The Financial provision was agreed by Parliament providing £18 million to finance the replacement of one of the Queens.
That is a separate item from the subject which we are debating tonight. In this Money Resolution, attached to another Bill, the Shipbuilding Credit Bill, the figure is given of £75 million.

But we are told that in this Money Resolution is included the £18 million which was the subject of a Money Resolution in l960.
We sanctioned that Money Resolution in 1960 giving the Minister power to pay out of the Consolidated Fund £18 million or to borrow under the National Loans Act, 1939 in order to finance the replacement of the Cunarder. That is already there. Are we then entitled to move in Committee that this £75 million does not include the £18 million in the other Money Resolution? We voted one sum of money four years ago. We are now pretending or appearing to vote another sum of money for £75 million. Anyone looking at the records of this Parliament would say that, in l960, the House voted £18 million for Cunard and, in 1964, voted £75 million for the shipbuilding industry. Anyone looking at it would imagine that this Money Resolution excluded the £18 million, so that, over the four years, we would have voted £94 million. But we have not. We have voted only £73·8 million. It is really a crazy situation. I do not know the answer to it.
It seems absolutely ridiculous to bring forward a Money Resolution which relates to a sum of £75 million, authorising the Minister to pay such moneys out of the Consolidated Fund or to borrow for the purpose, when he has actually committed only £73·8 million and has, apart from this, according to another Act of Parliament, committed £18million four years ago which he wants to say is included in this. I refer again to my suggestion that it would be legitimate in Committee to put down an Amendment on the lines I indicated. I cannot see that it would be infringing any Money Resolution to do so. I have never heard that the Money Resolution passed in 1960 has been repealed or annulled because Cunard said that it could not afford to pay any money out itself. Did the decision of Cunard automatically nullify the powers we gave to the Minister? Is the Minister saying that, because Curard did not want to build the ship, the provision we made to provide £18 million for the purpose is thereby nullified and the Cunard Com-


pany repealed or made inoperative an Act of Parliament? If that is so, how can it be said that the £18 million is included in this? He cannot have it both ways.
I suggest that the £18 million is additional to this, a different sum altogether under a different Act of Parliament. This is a new piece of legislation. It is not a Bill to provide an extra £75 million; it is a Bill to provide an extra £55·8 million. The Money Resolution is false; it is a misstatement. It should refer not to £75 million but to £55·8 million.
The Minister ought to give us an explanation. I do not know whether I shall be a member of the Committee, but I hope that we shall in Committee put down an Amendment to exclude the £18 million or to have the £18 million added to the £75million. We want an answer from the Minister. I am not satisfied, and I am very grateful to my hon. Friends for directing my attention to this complication, which appears to be very serious. Once again, the House is much indebted to the lively attention of Scottish Members in raising the point.

7.45 p.m.

Dr. Dickson Mabon: I beg to move, That the Chairman do report Progress and ask leave to sit again.
I do so on two grounds. First, there is the excellent point made by my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) which raises—

The Chairman: I am not prepared to accept that Motion. If the hon. Gentleman wishes to address the Committee, he may do so.

Dr. Mabon: With regret, Sir William, I have to accept your Ruling, although I believe that I have a very good case. Perhaps I may try again later, if we continue to have the same reception from the Government Front Bench.
I sympathise very deeply with the Ministers in their difficulty. They have not all the information at their finger tips and, apparently, they are not able to obtain the necessary assistance from those who help them in the Ministry of Transport. It is a great pity. It is regrettable also that there is no Treasury Minister here because a Treasury Minis-

ter might be able to help on this point. If my hon. Friend the Member for Dunbartonshire, East, who seems to show more appreciation of the implications of Money Resolutions than Ministers do, is correct in his assumption that the £75 million does not necessarily involve the Cunarder and we can take that out of our consideration because it is already covered by the financial provisions of the North Atlantic Shipping Act, I can be much more content than I was before. This will be a splendid windfall of £17 million or £18 million.

Mr. Ross: It is £17 million.

Dr. Mabon: It is £17 million according to the Parliamentary Secretary, but my recollection of the North Atlantic Shipping Act is that it was £18 million.

Mr. Bence: I thought that it was £18 million.

Dr. Mabon: There we are. Members of Parliament are not expected to carry these things in their heads as Parliamentary Secretaries are. We are entitled to be told exactly what the position is.
First, is the money for the Cunarder within the £75 million or is it not? Second, exactly how much money is involved? I thought that the Parliamentary Secretary was rather unfair to me—perhaps he is annoyed with me, and I can understand that—when he suggested that the intention of our intervention here was to restrict the level of loans to £73·8 million. That is not our intention. Every hon. Member who spoke on the Second Reading of the Bill made clear that he regretted that the Government were putting a ceiling of £75 million on the whole exercise. I reiterate that. I deeply regret that there is this ceiling.
Is the Parliamentary Secretary confident that, between now and 31st May, 1964, the applications for loans can be satisfactorily dealt with up to the level of £1·2 million? The Resolution is put in such a strict way that he will have to refuse applications, perhaps applications approved as valid and desirable by the advisory committee, because of this arbitrary limit of £75 million. This is very important to those of us who represent shipbuilding areas. I represent a town which, like any other shipbuilding town, rejoices when an order


is received. In every home there is rejoicing even though not all the people are involved in shipbuilding. One order is a lot to a shipbuilding town.
We are not engaged in a trivial exercise in arguing this point. It is not at all a matter of dilettante Parliamentary tactics. It is a matter of bread-and-butter concern to the shipbuilding towns. I want the Minister to give us the information for which we have asked. I would dearly like him to tell us why he thinks that his judgment is so good that he can decide on £75 million. We have had not a scrap of argument or explanation to show why £75 million is the golden figure. I very much hope that we shall get more from the Front Bench than we have had so far. It is a very important matter and I assure the right hon. Gentleman and his hon. and gallant Friend that this debate on the Money Resolution may well prove to have been more important than the debate which preceded it because people will see now why the Bill itself was accepted rather reluctantly.

Vice-Admiral Hughes Hallett: Taking, first, what the hon. Member for Greenock (Dr. Dickson Mabon) has just said, he made the same point during the main debate. He said that he thought that the sum should be larger, and this is, I quite understand, an opportunity which he has taken to protest against the fact that we are limiting the total figure to £75 million.
As regards the Cunarder, as I said before, this figure of £75 million will include the amount of the loan being given in respect of the ship commonly known as the Q4. When I was first asked what the sum was, I said that it was between £17 million and £18 million. Subsequently, someone whispered behind me that it was exactly £17 million, but I find that my original recollection was correct. The exact sum is £17·6 million, which, I hope the hon. Gentleman will agree, is between £17 million and £18 million.
This figure must not be confused in any way with the figure of £18 million which was quoted in the North Atlantic Shipping Act. That was an enabling Measure which permitted my right hon. Friend to make a loan for a Cunarder

which was commonly called the Q3. The North Atlantic Shipping Act could not be used as authority for making the loan in respect of the ship now intended to be built because that Measure was narrowly drawn and defined the purposes for which the ship had to be used. The purposes for which the Cunard Company is now prepared to build go outside that Act. That was why it was decided—in response, I may say, to a certain amount of pressure from the House and from the industry—to make use of this shipbuilding credit scheme to authorise this particular loan and thus save coming to Parliament with an entirely separate Bill, as would otherwise have been necessary.
As to the total sum—I do not know whether this answers some of the points made by the hon. Member for Greenock—I can only say that, of course, it is not necessary that we should end with exactly £75 million. What is necessary is that we should not exceed it. After all is said and done, the figure written into the Financial Resolution or the Bill does not relate to how much the industry may want to borrow—I am sure that many in the industry, like hon. Members opposite, would like to borrow a good deal more—but it relates to the amount which the Government are prepared to lend and are prepared to ask Parliament to authorise them to lend.
I can only go back to the debate we had on Second Reading. In his opening speech, my right hon. Friend explained at some length why we thought that this sum was about the right size. It is thought to have generated a volume of orders last year somewhat in excess of what we believe to be the normal rate at which orders will be received by our yards, and the Government's view, rightly or wrongly, is that it would not be a good service to the industry to have a tremendous artificially generated spate of orders, with all the attendant difficulties that that would produce. After all, it was such a situation which was so largelyresponsible, in the years after the war, for the difficult situation in which the industry found itself when orders fell off. I am sure that hon. Members with experience of these matters will agree that it is not in the best interest of yards to go through a period when, first, they are choked with


orders and then the reverse. However, I cannot enlarge on what my right hon. Friend said in explaining how we arrived at the general magnitude of the scheme.

Question put and agreed to.

Resolution to be reported.

Report to be received Tomorrow.

EXPORT GUARANTEES BILL

Order for Second Reading read.

7.55 p.m.

The Minister of State, Board of Trade (Mr. Edward du Cann): I beg to move, That the Bill be now read a Second time.
This is a Bill authorising the Export Credits Guarantee Department in effect to continue its business and to increase that business. The Bill relates to the liabilities which E.C.G.D. is authorised to incur. When E.C.G.D. issues a policy it puts public funds at risk. Limits have always been set to the total volume of such risks which it may incur. As the Department's business has increased Parliament has successively raised the limits set by the Export Guarantees Act, 1949, as the right hon. Gentleman the Member for Battersea, North (Mr. Jay) particularly will be aware, and as will other hon. Gentlemen present in the Chamber tonight. Four amending Acts have been passed for this purpose, as the House will recall, in 1952, 1957, 1959 and 1961.
Very large sums indeed are mentioned in the Bill. We do not, however, expect this Measure to involve any cost to the Exchequer through loss. The Department, again as the right hon. Gentleman and other right hon. and hon. Gentlemen will know, has so far been successful in conducting its business on a self-supporting basis. The limits contained in the present Bill involve a projection for some five years ahead, to 1969. However, I think I should make it clear that the Department's increasingly important in the export field—which does involve increasing complexities and the development of new techniques; all the time contracts seem to be petting larger and more difficult—must always involve the possibility that

a further request will be made to Parliament for a new extension of the limits before 1969. If this proves to be the case it will, I have no doubt, be further proof of E.C.G.D.'s progress and usefulness. Certainly, I should not complain if that were the case; nor, I am sure, would the House.
I will now explain shortly the procedures under which E.C.G.D. operates, first, with relevance to Clause 1(1) of the Bill. The Department's insurance business is carried on under two Sections of the 1949 Act. Section 1 of that Act deals with the commercial business, so called because it is underwritten after consultation with the Advisory Council and is considered by the Council to constitute sound insurance. The Council is composed of eminent men from many sides of the banking and commercial world and constitutes a body of practical and informed opinion which has contributed greatly—I am so pleased to be able to say this here—to the soundness and financial viability of the Department's facilities. I should like on behalf of the Secretary of State to express the appreciation of the Government—and, I am sure of the whole House—to them for their services.
The limit of liabilities under Section 1 now stands at £1,000 million. This limit has been unchanged since the amending Act of 1959. At the end of December, 1963, the latest figures which are available, the actual liabilities amounted to £918·7 million. Although only actual liabilities count against the limit one must also take account of the potential commitments which, at the same date, amounted to a further£96·3 million. These consisted of offers of cover which, in the nature of things, are not all taken up. The House will, therefore, understand that so far as Section 1 is concerned we are very near to our limit. As I have said, estimating the volume of E.C.G.D.'s business five years hence can never be a precise matter. The actual liabilities under Section 1 have increased by £111 million over the last 12 months and there is certainly no clear reason at present to expect any important change in the rate of growth and certainly no diminution. Accordingly, we think it right to provide for future growth of some £100 million per annum. It is on this basis that the Bill provides for the limit on


business under Section 1 to be increased from £1,000 million to £1,500 million.
I now turn to Clause 1(2). Business not accepted by the Advisory Council, to which I referred a moment or two ago, can be insured under the 1949 Act—I quote it—"in the national interest" under Section 2 of that Act, although basic underwriting principles are still observed. The limit of liabilities under Section 2 now stands at £800 million. The limit was last increased by the amending Act of 1961 from £400 million to the present limit of £800 million. At the end of December, 1963, taking the same basis as I referred to in relation to subsection (1), the actual liabilities under Section 2 were £391·1 million. Potential commitments were a further £453·9 million. Again, as in the case of Section 1, we are theoretically nudging the limit, although in practice there is probably still some distance to go.
It is particularly difficult to make precise forecasts of how liabilities under Section 2 may be expected to develop. Several distinct classes of business fall under the Section. I know that the right hon. Gentleman is particularly interested in this point. Indeed, his speeches in earlier years have indicated this, and I hope that some of the things I shall say will be of special interest to him. The two largest classes of business under Section 2 are financial guarantees and economic assistance loans. The financial guarantees, which were introduced in 1961, are all transacted under this Section. At present they account for over £80 million of firm liabilities and almost £290 million of potential commitments. Calculating the rate at which applications for financial guarantees are being received—and we now have some experience of this matter—and again taking account of the fact that a number will not be firm business, we think that we should provide for the issue of financial guarantees to the value of some £50 million a year. So much for that.
Economic assistance loans are given to overseas Governments for the purchase of British goods or services. Although given under Section 3 of the Act they are required to be accommodated within the limit for Section 2 business. The future scale of this form

of economic assistance must depend upon two factors; first, upon Britain's capacity to provide economic aid, and second, on Government policy as to the form which such aid should take. Therefore, it is particularly difficult to forecast exactly the future volume of this type of aid. We consider it reasonable to provide for a further £50 million per annum. I must however—I think it is appropriate that I should do so—remind hon. and right hon. Gentlemen, for the record at any rate, that this cannot be regarded is a pointer to the composition of future aid, for these loans under Section 3 are, as the House very well knows, only part—at present about one-quarter—of our total aid effort, which has risen so very greatly in recent years.
The terms of repayment under both these facilities, financial guarantees and economic assistance loans, are such that the rundown of our liabilities on existing guarantees, and loans will make little impact on the figures. There is nothing, therefore, in the immediate future on the credit side. We propose, therefore, to provide for total future commitments under Section 2 at a rate of £100 million per annum—that is, £50 million plus £50 million—and, secondly, increase the Section 2 limit by £500 million from the earlier limit of £800 million to £1,300 million. Perhaps I should add that the other two classes of business under Section 2, business in weak markets not acceptable to the Advisory Council and new, experimental types of cover such as the small exporter policy, do not at present make up a large total of liabilities and we consider this to be accommodated adequately within this new limit. Thus House may incidentally like to know that in two and a half years' operations 1,581 policies have been issued to small exporters. I am sure this is a record of encouraging progress.
Although, counting in all potential commitments, we are, as I know such accountants as are in the House tonight will have rapidly calculated already, £15 million above our limit under Section 1 and £45 million above our limit under Section 2, I want to make it clear that we do not face an immediate prospect of having to turn away otherwise insurable business. Alas—I say it with feeling—our exporters cannot win every contract which they seek, and those which they


may get under offers of financial guarantees relate, of course, to large projects for which the usual commercial negotiations must inevitably be protracted. Nevertheless, I suggest to the House that it is right to consider the whole question of limits at this stage.
The level of potential commitments is large and it is growing. The House may think that it would be not right to delay the introduction of this Bill till we are clearly about to exceed the level which Parliament has so far authorised. Indeed, I would go so far as to say this. E.C.G.D. could not offer a continuous service to exporters, as I believe it must, if we had to wait till actual liabilities reached the statutory ceiling before Parliament considered raising it.
On a point of some detail, that is to say, relating to Clause 2, I should perhaps mention the new arrangements for the Channel Islands and the Isle of Man, under which exporters in those places will be able to obtain the same facilities as exporters in the rest of the United Kingdom. I am confident that any encouragement which the extension of the facilities provides to exporters in these islands will be to the benefit of the British economy. The House may again like to know that the authorities in these islands favour this step. There is, however, a corollary. It is this. Exporters in the United Kingdom will no longer be able, as they may now if they wish, to ensure with E.C.G.D. sales to buyers in the Channel Islands. This insured trade is small, and commercial insurance is, in any case, available for it. The balance of advantage, the House may think perhaps, clearly lies in making this change.
To summarise, the purpose of this Bill is to enable E.C.G.D. to continue its increasingly important work of helping and protecting British exporters and thereby further promoting our export trade. Having described shortly, and, I hope, clearly, the individual Clauses of the Bill, I would make, similarly briefly, certain other general points regarding the Department. I think I should say a word particularly on the subject of its reserves.
Reserves on commercial account are currently £41 million. This sounds a very great deal of money, but when considered in the context of the total of

E.C.G.D.'s business I believe it really a very small amount of money. Be that as it may, these reserves are not free reserves. Part consists of premium received on many transactions which have a considerable time to run and on which claims may have to be paid at some future date. I suggest to the House that the existence of a residuary reserve must be of real benefit to the British exporter, in that E.C.G.D. is enabled thereby to be, on suitable occasions, more venturesome in risk taking, particularly in the volume of risks which it can carry on any of the large and relatively unstable markets, by having this record of successful business to fall back on.
The real evidence of the value of E.C.G.D. to Britain's export trade is the volume of business it insures. I have spoken of this in general terms already. Now I should like to be particular. In the past 12 months it insured £1,100 million worth of British exports on behalf of no fewer than 7,000British exporters. For the first half of the financial year E.C.G.D. covered more than 25 per cent. of our direct exports, double the proportion insured 10 years ago.
I have no reason to think that this proportion will fall to any marked extent in future. Indeed, I would suppose quite the opposite. The E.C.G.D. is still the world's largest export insurer and the British export trade is still the most fully credit-insured in the world. The growth of business and the establishment of a reserve has in turn benefited policy holders. I have mentioned one aspect of this already. I now mention another. The average cost of insuring business on up to six months' credit has dropped during the last nine years alone from 11s. 8d. to 6s. 5d. per £100 insured—not quite a reduction of as much as 50 per cent., but, none the less, a substantial reduction.
I am glad to have the opportunity to give the House a progress report on E.C.G.D. for which, under the Secretary of State, I now have responsibility. As the House is very well aware, and as the National Economic Development Council has made plain, increased exports are fundamental to the progress of our economy. The work of the Government in facilitating the task of


exporters is assuming an even greater significance year by year and month by month. The precise figures of exports in 1963 are now becoming available and will be announced before the end of this week in the ordinary course. I imagine, however, that the House would wish to have the best information I can give during this debate.
I am happy to report that during 1963 exports were an all-time record at a figure in excess of £4,050 million, representing an increase of over 7 per cent. on the previous year.

Mr. John Diamond: In money terms?

Mr. du Cann: Yes. I was going on to say that by comparison with the early years immediately after the war, again in money terms—I recognise the distinction which the hon. Member rightly makes—this represents an increase of well over three times which, even taking into account the fall in the value of money, is a colossal achievement on the part of British exporters who work hard to achieve these results, and it is some compliment to the many and varied services which the Government endeavours to provide and of which the work of the Department is one.
I wish to make it plain—this is the first occasion that I have had the opportunity to speak on this subject in particular and on these subjects in general—I shall not hesitate to authorise improvements in the service of E.C.G.D. in order to keep pace with changing conditions. The House will realise that there are practical limits on what can be done. For example, it would be wrong for the United Kingdom to start a credit race from which no nation would gain. On the other hand, the conditions available to British exporters must be as good as any in the world.
One item which we are currently investigating is the Department's accounts, about which comments have been made in earlier debates, and related issues of policy.

Mr. J. J. Mendelson: Is it not misleading to talk about starting a credit race? Surely all that can be usefully discussed is how much we can do in order to remain in the race at all.

Mr. du Cann: I do not think that is altogether true. I agree that this question of competition between nations over terms of credit is thoroughly worrying and difficult. It is a matter to which we have given great attention both in our membership of the Berne Union and the work we have endeavoured to do in O.E.C.D. Senior officials of the Department have literally only just this minute returned from discussions in Paris on this point. I think that there is great substance in what I have said about the need to avoid leading a credit race, because it is plain that our techniques—and I hope that the hon. Member will accept this from what I have said—are as sophisticated as any. It is plain, too, accepting the fact that we are the most credit-insured nation in exports in the world, that other people are to some extent jealous of what we have done and will watch what we do in future with great interest. It would be easy for us to lead a credit race, but I am sure that no one would gain from it. I stand by what I said when I made the point that the facilities available to our people must be as good as any.
Officials of the E.C.G.D. and the Treasury are at present engaged in a thorough study of the detailed matters to which I referred—the question of accounts and related matters of policy. In the context of what I have been saying in general, this is perhaps a minor point, but I make it simply as an earnest of our intentions in the matter, to improve the efficiency, effectiveness and, from the point of view of Parliament, the clarity of the Department's work whenever this is possible.
I have spoken about the attitude of our overseas competitors. I think that perhaps the best possible tributes to the Department arise from time to time from our overseas trade competitors. It is, perhaps, ironic that the unusual number of cases when the Department facilitates business which would otherwise not have been done tend to attract less comment at home than the individual cases where the Department may find difficulty in meeting exporters' exact wishes. I always feel that this is rather like marriage. It is the difficult cases which hit the headlines but our own individual Dunmow flitches receive no attention.
The Department engages in a highly specialised business: export credit insurance against commercial and political-economic risks. It consistently conducts its complex affairs on sound commercial lines, and has a history, as the right hon. Member for Battersea, North will know, of 33 years of successful operation.

Mr. Douglas Jay: Thirty-three years?

Mr. du Cann: The right hon. Gentleman questions my arithmetic. I made most careful inquiries to ensure that my figure of 33 years was correct. It is possible to argue a number of different dates, beginning, perhaps, with 1919. I am taking as a basis the Niemeyer Report, with which the right hon. Member will be familiar. Whether we argue about 33 years or 35 years does not matter very much. What matters is the service which is given today and the fact that the Department has an unparalleled record of success, about which I know we all agree.

Mr. Julian Snow: The hon. Gentleman has referred to the relatively few cases in which the requests of exporters have not been met by the Department for good reasons. Has he any information about the geographical locations concerned in these rejections? I refer to this because I am particularly interested in difficulties confronting potential exporters to emergent countries where commercial and mercantile practice is, perhaps, not very sophisticated.

Mr. du Cann: The hon. Member does the House a service by raising that point. I cannot without notice give a specific reply to his somewhat technical question. An answer would require the collection of a mass of statistics. I am aware of the difficulties when perhaps less sophisticated techniques and less ordinary commercial understanding are current in some newly emerging countries, and these make difficulties for the Department; it is no good gainsaying it. Such experience as I have had in the Treasury and now at the Board of Trade prompts me to suppose that the attitude of the Department is to endeavour to be helpful. I should be satisfied that business is not refused unnecessarily

or wrongly. On the other hand, I recognise that the hon. Member has substantial commercial experience which makes his intervention all the more valuable. I invite him and his friends in commerce to let me know personally of any points of difficulty which I will be ready and happy to look into, as will officials of the Department. I will give him the information for which he has asked in the form of correspondence in the next few days.
The Department has steadily extended the range of its facilities by innovations which make it not only the leading credit insurer in terms of turnover but a fertile innovator whose techniques are widely copied by its overseas competitors. This is one of the most striking developments of all in recent years. The Department has a lead which it can and will maintain. I commend the Bill to the House.

8.19 p.m.

Mr. Douglas Jay: We welcome the Bill for many reasons and we shall certainly support the Minister of State's request for another rise in the financial limit set for the E.C.G.D.'s activities. These two-yearly Bills—they have been two-yearly up till now, although, apparently, the Minister hopes that they will be five-yearly, but I think that that is nothing more than an aspiration—asking for higher limits are proof of the success of the Department in maintaining our exports. They are also, incidentally, a remarkable tribute by a Tory Government to a very important form of State insurance, for that is what export credit guarantee business is. This is from one point of view yet another example of the Government being forced either to extend the activities of existing Government enterprises or even to invent new ones as they have been compelled to do in recent times.
This State insurance Department, as the Minister says, has seen its limit for liabilities under Section 1 actually increase—these are remarkable figures—from £500 million in 1949 to £1,500 million under this Bill. I agree that this is not direct expenditure. It is a guarantee of liabilities but, none the less, it measures the Department's activities, and under Section 2, the so-called national interest guarantees, from £100 million in 1949 to £1,300 million under this Bill.
The Department guarantees, according to the latest figures that I can obtain, are £976 million of exports in 1962–63—that is the E.C.G.D.'s year—under Section 1, and another £50 million under Section 2. That seems to correspond fairly closely to the figure of over £1,000 million guaranteed in the calendar year 1963 which the Minister gave us just now. This amounts to 25 per cent. of the total exports of the United Kingdom. I think that the figure in our previous debates was more like 18 per cent. to 20 per cent. Therefore the proportion of our exports covered by the Department's activities is steadily rising. It also made, on the latest figures that I have, a revenue profit, a net profit, of something like £7 million over the 1962 to 1963, and I gather that neither the insurance companies nor the Aims of Industry nor the Institute of Directors nor even the Steel Company of Wales wishes to close down this Department or to denationalise it or anything of that kind. Everyone knows that private insurance dare not take these risks and that E.C.G.D. provides a large slice of our export business and without which our assistance to underdeveloped countries could not be carried on at all.
On the other hand, I am sure that the House is wise to examine the Department's operations every two or three years. I do not believe for one moment that it has yet reached final perfection, and I do not imagine that the Minister of State would argue that either. There has been a certain rhythm in these debates on this Department. We on this side usually suggest that the Department might go even further in providing services and meeting the competition of some foreign countries. The Minister usually tells us that nothing further is possible or desirable and then six months or a year later comes forward and introduces changes very much on the lines that we propose. I remember in the debate of July, 1959, the then Minister of State, the right hon. Member for Reigate (Sir J. Vaughan-Morgan), who has not stayed the course tonight although he usually does, had the job of explaining the Government's point of view that any further improvements were rather academic and that nothing further could be done along the lines which we propose.
But in the debate in November, 1961, the right hon. Member for Reigate was then on the back benches, and he spoke, as Stanley Baldwin once did, with appalling frankness. Commenting on my suggestions on certain bright ideas, he said this
…the reason is that this Department, although supreme in its own sphere, is largely—dare I say it—at the mercy of the Treasury.…it is only within the limits allowed that the Department can relax its regulations and provide a better service."—[OFFICIAL REPORT 10th November, 1961; Vol. 648, c. 1305.]
This was a most interesting revelation from the hon. Member who two years before had actually introduced the Bill. Perhaps the Minister would now tell us, as he has just come from the Treasury, and no one is better fitted than he to answer this question, whether he is now secretly yearning to make further improvements in the service of the Department but is being frustrated by the machinations of a wicked Chancellor. Are there more improvements which the Department would like to make in the interest of exporters but which the Treasury is blocking? The right hon. Member for Reigate also said two years ago, and I agreed, that the House had up to then been really given grossly inadequate information about the activities of the Department under Sections 2 and 3.
My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who has stayed the course as we would expect of him, made the same point two years ago when he said that the Government's then explanation on this point was as clear as mud. We have been repeatedly told, for instance by the present Minister of Housing and Local Government when he was performing this office, that Sections 2 and 3 share a common limit, i.e., that the maximum of £1,300 million, which we are now being asked to approve under the Bill, covers both Sections 2 and 3 activities.
The hon. Gentleman said something about this tonight, but I am not absolutely clear what he means, for this reason. Section 2 is concerned with guaranteeing liabilities, and therefore presumably these large capital sums refer to liabilities guaranteed. Section 3, on the other hand, is concerned with actual loans. The words used are, I think, "acquisition of securities by the Department." I am not clear exactly


how one adds up the liabilities guaranteed for loans made by the Department. Can we be told what loans have been made, perhaps less repayments, under Section 3 for the last year or perhaps since the last Bill was passed?
I have studied the only statements made by the Secretary of E.C.G.D. and the rather obscure Civil Appropriation Account, which is published and which would appear to suggest—and this, strangely enough, gives us no more up-to-date figures than to March, 1962—that E.C.G.D. under Section 3 then had advances outstanding of something like £135 million, but for what period that covers or for what period these advances have been made I was unable to discover. I wonder whether the hon. Gentleman might give us this information. [Interruption.] If the hon. Member for for Willesden, East (Mr. Skeet) understands it all, no doubt he will explain it to us in a moment. There is plenty of time for him this evening to make the whole thing perfectly clear. In asking these rather critical questions, we are far from being unappreciative of the Department or indeed of the Advisory Council which, as the hon. Gentleman says, gives it invaluable assistance.
There are two quite strong reasons for inquiring whether more needs to be done. First, in spite of what the hon. Gentleman said in his quite interesting figures about our exports in 1963, I do not think that we can be too complacent about the movement of British exports and imports, taken together, during this last year, in a year when, after all, the United States economy and those of most other industrial countries of the world were booming and when the terms of trade were moving against this country, and when also the Government seem to be bereft of any other ideas at the moment for stimulating our export trade.
The hon. Gentleman gave us some figures which showed, as I understood him, that United Kingdom exports in 1963 in value were 7 per cent. higher than in the previous calendar year. I have the official figures for the three months from September to November, 1963, which show United Kingdom exports were actually 7·1 per cent. higher than in the corresponding three months of 1962. While the figures might seem

to correspond, the hon. Gentleman did not tell us the corresponding figures for imports which, in the three months' period, were 10 per cent. higher in 1963 than in 1962. When one looks at it from that point of view there is nothing about which to be too complacent.
Indeed, at a time when imports are rising at the rate of 10 per cent. a year in value, when the terms of trade are moving against us and when the Government refuse to do anything to limit imports—except, oddly enough, for food; the most essential import of all—the picture is not at all cheery. Nor do the Government appear to be doing anything else to stimulate or encourage exports. The Richardson Committee was appointed about a year ago to inquire into possible tax incentives, but we have heard nothing about its work in the last 10 months.
My hon. Friends and I have on many occasions suggested that to help the small exporting firms, which, on all the evidence, will not be able to do as well as most of the major firms, some form of Government co-operative export agency might be formed. The Government have not merely done nothing about that, but they have not even made any comment on the matter. We have now had the steel plant industry publishing a report on export credits in which it is suggested, for example, that a State guarantee corporation, independent of direct departmental control, might be useful for export credits. This suggestion came from industry and it would be interesting to know what the Minister of State thinks about the idea.
The Federation of British Industries, in a recently published and valuable report on the whole question of exports, export credits in particular, made a number of detailed and constructive suggestions. I will not list them all but merely mention one or two to see whether the Minister thinks they are valuable suggestions. I appreciate that he may turn them down today and tell us six months hence, if he is still there, which is extremely unlikely, that they are admirable and practical suggestions.
The F.B.I., for instance, argue that the E.C.G.D. has been too rigid. I appreciate that "rigid" is a word often used these days, but on this occasion it is an appropriate one to express the F.B.I.'s


view, which is that it has been too rigid in usually requiring what is called the spread of risk and thereby excluding credits for selective markets and customers. Does the Minister consider that this makes it harder for firms to break into new markets? I appreciate that there are selected market guarantees, but in the opinion of the F.B.I. the premiums in these cases are too high.
I notice that both the F.B.I, and the Radcliffe Committee, which made a fairly thorough investigation of all this, argue that the Department should be more willing to cover what are called split risks, that is, guarantees at appropriate rates, confined to, say, commercial risks, on the one hand, or transfer risks on the other. What does the Minister of State think about that?
There is another case where both the F.B.I. and the Radcliffe Committee believe that we can go further than we are. This is in the case of the minimum limit placed on medium-term business which, they believe, should be less rigid than it is at present. The F.B.I, thinks that the present limit of £100,000 might be lowered in appropriate cases.
Does the Minister agree with the F.B.I, that the E.C.G.D. should be able to cover more fully than it does now exchange risks which, I gather, are largely left to the exporter himself to cover—the risk of large alterations in exchange rates? It is still the F.B.I.'s view that British interest rates for export credits are higher even now than comparable rates offered by Italy, Japan and, even more important, the American Export Import Bank which, I suppose, is the E.C.G.D.'s greatest competitor. Surely in the matter of interest rates the British exporter should be put on an equal basis with his competitors.
It seems, whatever way one looks at it, that the export battle ahead of us is likely to be so stiff that we should press ahead on all these fronts—that is, unless the Minister and the Department have a much more convincing answer to the proposals that have been made than any we have yet heard from the Government. I agree that some of these suggestions are in many respects on technical issues affecting commercial export credits. However, I believe—and the Minister touched on this—that we need to do some rethinking on our

export credits policy on a more long-term basis find over a much wider sphere—that is, affecting economic assistance loans under Section 3, aid by way of Government loans to the less developed countries and special loans for the use of surplus capacity in this country in exports to the less developed countries.
In the course of visiting India and Pakistan last summer it was made clear to me how nowadays in exporting to the less developed countries trade follows aid. That has not been fully realised by many people. If anyone is inclined to doubt this, he should study another excellent F.B.I. report on the Indian economy. That shows convincingly that in the last six or seven years the proportion of aid to India from the United States and Germany has been rising while the proportion from the United Kingdom has been falling. The proportion of India's imports from the United States and Germany has been rising while the proportion of her imports from us has been falling. This throws a new light on a lot that has been said in recent years on the proportion of fall in our trade with the Commonwealth.
It has been argued that the proportion of our exports going to the Commonwealth is falling, but I do not believe that people have always realised that for India, Pakistan and similar underdeveloped countries in the Commonwealth this fall has largely been due to our aid and export credits policy—whether or not it is justified—to the fact that we have been offering less generous terms than other countries, particularly the United States.
I can give a concrete example of this and I do not know whether or not the Minister of State is aware of this. Last year the Pakistan Government decided to set up a single, large-scale lorry manufacturing plant which was likely to have a monopoly of the whole lorry market in Pakistan for 25 to 30 years ahead, because Pakistan cannot afford the foreign exchange for imports. Leylands put forward a complete scheme by which they would construct and manage this factory, and the Pakistani authorities were anxious to prefer Leylands' proposals to those of the American firm which was competing. But the American aid and credit authorities were willing not merely to lend foreign exchange, as


we were, for all initial equipment of the factory, but for spares and other necessary facilities over a number of years afterwards.
As a result of that, since Pakistan suffers from a famine of foreign exchange and is bound to accept the most generous offer which involves the lowest expenditure of foreign exchange from her side, the contract, the licences, and so forth, went to the American firm, and Leylands will be excluded for good. That means that the lorry market of a nation of 100 million people, which is likely to develop rapidly over the next 30 years, is virtually permanently lost to us. I understand that the same sort of thing has happened in the aircraft industry in competition between us and the United States.
This is a solemn thought, because if we are to go on like this in many countries over many industries it is quite certain that our proportion of exports to these extremely important countries, which may well be the developing export markets of the future, will fall. I am very familiar with the Treasury argument that we do not export for fun, as the previous Prime Minister once said, nor do we export to give the goods away, but to earn foreign exchange, so that we must not go too far in making our credit terms too liberal. That is true, but if we push that argument to the point of always lagging a little behind the Americans—or, perhaps, the Germans or the Japanese—we will see our markets in these under-developed countries steadily declining.
Here one has to take an over-riding decision of policy. Either we have to admit defeat—as, in fact, we are doing now—and lag behind the Americans, in particular, or we have to say, on a long-term view, that although we will not give our exports away we are prepared to see payment for them by the poorer countries deferred over a much longer period.
I believe that we should take the second course, because I am convinced that it is our only way of remaining a great exporting nation in the sort of world in which we live today, whether it be to the underdeveloped countries or the Iron Curtain countries. I would not advocate free gifts of our exports, except in certain accepted forms of special

aid, nor would I advocate interest-free loans, which are often demoralising to the recipient as well as to the giver. But I believe, and I suggest this to the Minister, that when we go from the field of ordinary commercial credits into that of economic assistance loans, Government-to-Government loans, tied loans for certain specific big projects, and so on, even when we are dealing with poorer countries like India and Pakistan we should be willing to accept long periods of payment—30 or 40 years, perhaps, in some cases—and low, though not negligible, rates of interest.
It may well be, we do not know—I am thinking, I admit, to some extent of India and Pakistan now—that those two countries will become economically viable in 30, 40, or 50 years' time. They will not be economically viable in 15 or 20 years, but may be in a longer period. Much more unlikely things than that have happened in economic history in the last 25 or 30 years. If that is true, or even likely, we would be wise to export to these nations, not for nothing but on deferred payment terms that would enable their economies to become viable, our exports to increase and payments to flow back to us—because, of course, we must have payment in the end—slowly at first, but on a growing scale as their economies develop.
I think that, when we look at it from that wider point of view, this would be in the highest interests, not merely of ourselves but of the developing countries. That, as far as I can understand it, is really the principle on which American policy is being conducted in its credit and aid relations with these countries. I know that the Americans have much greater resources than we have—that is the main difficulty—but that is the principle on which they are working, and unless we, too, adopt that principle, when we look at the hard facts of the situation and the figures of the last five or six years, it seems to me that we are likely to see the present comparative decline continuing, not merely in our exports to these areas and in Commonwealth trade but also in British economic and political influence over very large parts of Asia, Africa, and Central and South America as well.

8.45 p.m.

Mr. T. H. H. Skeet: We ought to pay tribute to the E.C.G.D. for the remarkable work which it has done over recent years and also to the Government for the number of facilities it has introduced. The discounting facilities of the Bank of England over a period of 18 months prior to maturity is one of the useful things which the Government have introduced as also the assistance granted to small exporters.

When the right hon. Member for Battersea, North (Mr. Jay) spoke about interest rates I am certain that he was aware of the grouping of the London clearing houses, the Scottish banks and the insurance houses to make provision for long-term credit facilities at fixed rates of interest. This is one of the singular contributions which have been made and it goes a long way to meet the point which the right hon. Member had in mind. He also mentioned long-term lending at advantageous rates. Are these to be twenty year or thirty year loans? If they are, there is the immediate problem that the seller in the United Kingdom will not receive payments for a number of years.
A large part of the right hon. Gentleman's speech was concerned with the question of long-term lending as opposed to insurance not covered by the Berne Union. We can get into some difficulties about this. Under the Berne Union there is some law and order internationally although possibly it should be controlled under the auspices of the World Bank; but, on the other hand, long-term facilities which are outside the agency of Berne should also be subject to some sort of international control otherwise this sort of lending might well and truly get out of hand.
We have met our obligations in India singularly well. In loans for economic development India has received since 1949 no less than £193 million under Section 3 loans. If account is taken of total foreign investment in India, about 60 per cent. is British and therefore we are well placed there.

Mr. Jay: But it does not look too good from the point of view of the proportion of annual aid to India now through the consortium, of which about £30 million comes from this country out

of a total of £400 million a year. This is a rather small proportion.

Mr. Skeet: The right hon. Gentleman has a point there, but it must be remembered that other nations, such as the United States and Japan, also operate in this business. The United States used to agree to an open-door policy, but it has gone away from that. As a great trading nation we should try to persuade other countries not to adopt this kind of procedure.
The question of Section 3 loans has been raised. For accounting purposes these loans are considered under Section 2. Total lending under the Export Credit Guarantees Acts 1949 to 1961, according to my calculations, was £344 million and of that 71·1 per cent. has been allocated to Asia, 14·2 per cent. to Africa, 6·6 per cent. to the Middle East, if the U.A.R. is included, 7·0 per cent. to Europe, that is to one country, Yugoslavia, and 1·1 per cent. to South America. Five nations, India, Pakistan, Nigeria, Iran, and Yugoslavia received 86·3 per cent of the total, and two nations, India and Pakistan, receive approximately 70 per cent. of the total.
Bearing in mind our world-wide commitments, are we right when Ministers go on global tours—and several have gone to South America—to allocate such a small figure as £3·8 million for economic assistance to South America which incidentally has gone to two countries, Bolivia and Chile? We should bear in mind that our contribution to the Asian Continent is £245 million, and to Africa £49 million where we have immense possibilities and the future is opening up in front of our eyes.
Is the Minister happy about this global distribution which has been going on since 1949? We have been told tonight that the total is to be lifted considerably and that my hon. Friend hopes that the average allocation per year will be covered by about £50 million under Section 3. I would have thought that this was a useful way of extending the exports of the United Kingdom, and I would recommend that the figure should be higher still.
Another matter to which I should like to refer, and to which the right hon. Member for Battersea, North referred, is the possible Treasury control of the


E.C.G.D. I think that we must be mindful of the fact that, as regards the financial guarantees, they are operated under Section 2 by the E.C.G.D. with Treasury consent. The right hon. Gentleman will recollect that a few years ago a consortium was established in London which raised considerable sums of money, but, because of difficulties with the Treasury—and I hope that my hon. Friend can explain this because he has had a foot in both camps—there has been some difficulty in utilising the funds available, and therefore in this respect the E.C.G.D. is not entirely in charge of its own affairs.
As I said earlier, I pay tribute to my hon. Friend's Department. It has export insurance, but I regret to say that over a term of years it has not developed investment insurance. In 1959 Western Germany introduced this for the first time, and she is not the only country in the free world which has been operating such a system. That means that a company not merely exports its goods under guarantee, but has a right to export its capital with a guarantee, viz. by direct investment in enterprises abroad and by participation in enterprises overseas.
Members on both sides of the House recommend that we should do our utmost to assist under-developed territories of the Commonwealth. The right hon. Gentleman said that trade is the best form of aid, and that aid brings trade to this country. If we try to encourage firms in this country to spend more abroad in the sense of building up investments there, they will make a direct contribution to that area, but so far the scheme I have mentioned has not materialised. Perhaps the Minister may have some rather good ideas on this point.
Not immediately relevant to this question of the E.C.G.D., but I think extremely relevant to the export industry of this country, is a matter which was discussed in The Times, when on 6th January of this year a correspondent dealt with the paper war which has been engendered over recent years by a number of the newer countries, and it may be that some of the older countries have got themselves into this kind of difficulty.
One of The Times'scorrespondents referred to the number of invoices made out in connection with sending goods abroad.

Mr. Snow: To the Commonwealth?

Mr. Skeet: This was in connection with goods sent to Brazil. The correspondent reported that 18 copies of the invoice had been demanded and sent. They were distributed as follows: to the London agents of the Brazilian customer 7; to the shippers, and some had to be authenticated, 6; to the bank 2; miscellaneous 3; making a total of 18. The same firm—and I have had an opportunity of looking into the matter more carefully and I hope the Minister will be able to do something about this—dealt with an order from France for delivery to Iran. The number of invoices required was 24. In an order received from Washington for delivery in Nepal, the number of invoices required was 20. With an order received from New York for Peru, the number of invoices required was 18, and in other orders for Bolivia. Brazil and Venezuela, the numbers were 18, 15 and 15, respectively, and these did not take into account the individual requirements of the firms in question.
Perhaps I may carry that a stage further, because I think it is important and is the cause of some of the difficulties being experienced by exporters. In The Timesof 10th January there was a letter in which the correspondent referred to the number of papers he had to complete. There was a total of 24, but the actual documents totalled 60. The correspondent wrote:
While leaving out of account copies of invoices left with the Chamber of Commerce and the Brazilian Consulate, as well as those sent direct to the customers in Brazil, it may perhaps be worth mentioning that three copies of the list of items (21 pages) had already been sent to Brazil, to serve as a basis for obtaining an Import Licence.
The Minister must be aware of the enormous burden that is being placed on our export industry while these sorts of things are allowed to goon. I would have thought that he would be in a position to influence the direction of this paper war. Perhaps he will be able to tell us tonight how the E.C.G.D. has fared with some of the new countries. I have a suspicion that its losses must be considerable, particularly in Brazil


if this is an indication of the States efficiency.
I should like to mention the type of document required of a company of this nature. The invoice has to be authenticated.
We hereby guarantee that this invoice to"—
and then the company is mentioned—
is authentic and that the value shown thereon…is the actual selling price for the export of the goods based on local market quotations. Further we are not purchasing agents of the importers in Brazil. The material is new and not used or secondhand. We declare also that the goods are in accordance with the exchange cover certificate and amendment.
It is extraordinary that documents in this form should be required. Ghana has regulations of its own. Amongst the documents which the Ghana Commercial Bank requires are three copies of manufacturers' invoices. I can understand the exporter supplying his own invoice, but why should he have to supply, in addition, the manufacturer's invoice—the man further down the line? Hon. Members will appreciate that in the case of the supply of components no allowance is made to cover fees for designing, overheads and similar items. My plea to my hon. Friend is to look into some of these commercial matters and to see whether it is possible to find a way through the wilderness.
In the past two or three years I have become rather concerned about the cash flow from the United Kingdom. The E.C.G.D. can do a lot by insuring our exports, but the best way to promote exports from the United Kingdom, apart from hard selling, is by investment. I have the figures relating both to public and private advances abroad, in relation to certain countries in 1962. For the United States of America it amounted to £1,370 million; for France it was £430 million, and for the United Kingdom, £298 million. We have therefore fallen far behind in this race. It may be that recent budgets have created a certain disincentive for money to migrate, but if this is to be so on the private front more should be done on the public front. I confess I would rather see more done on the private front, because in that case capital will be utilised to full advantage and commercial considerations will be taken into account.
A number or institutions have grown up recently. The Midland and International Banks has been formed—a private consortium to provide long-term credit. There is another body called the Atlantic Community. Development Group For Latin America for stimulating private investment in that region. I hope that the United Kingdom will participate in the second international organisation, which covers Japanese, European and United States interests. This would further our trade participations abroad.
The course is full ahead for the United Kingdom. We have an enviable system of guarantees, although we should not be too complacent about our position. The facilities and enterprise in certain European countries are as good as ours, and they have guarantees which extend beyond export insurance: they cover investment insurance. If we are prepared to do our utmost to see that our trade advances considerably this money, which is now being allocated over the years, possibly to 1969, will be fully utilised.

9.0 p.m.

Mr. Julian Snow: I congratulate my right hon. Friend the Member for Battersea, North (Mr. Jay) on a speech which I thought was a fair, constructive and critical analysis of the situation. This has been my right hon. Friend's day, because hon. Members will recall his devastating attack on the Minister this afternoon regarding retail price maintenance.

I wish to comment on one point made by the hon. Member for Willesden, East (Mr. Skeet). I agree that one matter to which we should direct more attention is the possibility of the export of capital investment. My attention was drawn to this quite recently through some information I received regarding the activities of Japan in this matter in relation to the new member of the Commonwealth, Malaysia. In the old days, those of us involved in normal manufactured goods exports regarded Japan as a formidable competitor, but never as a competitor in matters of capital investment. But what is happening in Malaysia is something to which this country must pay more attention.
I should like to thank the Minister for his courteous reply to my intervention in which I asked whether he had at his finger tips an analysis, or figures, concerning the territorial break-up of those cases where applications by small exporters have been rejected. I understand that he cannot produce this information straight away. But, nevertheless, I think that such an analysis would be worth while producing and I wish to enlarge on that a little.
Our main export drive is obviously a three-pronged drive. We must devote far more attention in the future to our trade with the so-called Iron Curtain countries. When we consider the record of Western Germany in this matter, we realise that this is something over which the Government have fallen down. Secondly, there is the question of trade with the sophisticated industrial countries in Europe and outside Europe and, thirdly, Commonwealth trade, which must include trade with sophisticated and industrially developed countries, and countries which are emergent or developing. I wish to deal with the latter in a moment.
Regarding the industrially developed countries, whereas the market is most important and must remain so for a long time, and therefore our competitive position regarding credit must continue to receive urgent consideration, in the long run in other manufactured goods, which form the substantial part of a small exporter's business, we shall get to the point where we shall be trying to export those things which the countries concerned are capable of producing for themselves. I may perhaps quote a remark attributed to Mark Twain, who referred to the precarious livelihood earned by the inhabitants of the Scilly Isles by taking in each other's washing.
It is the less sophisticated countries to which I wish to refer. I think that E.C.G.D. will have to instigate a great deal more investigation into the question of dealing with countries where the private enterprise mercantile communities are in a rather simple state, lacking in experience and not subject to ethics which are now accepted in ordinary highly developed countries. We have to face the fact that in certain countries in West Africa—and this goes for the West Indies as well—exporters are

frightened about getting involved, and E.C.G.D. is not always in a position to help. I heard the other day of a substantial confirming house which got into great difficulties in this matter. I do not know whether this is a case for trying to secure some form of agreement with the countries concerned or whether it involves allowing for a special risk. But unless we get our feet into these emergent countries and take, if necessary, a substantially added risk, in the long term this country will suffer very greatly, because other countries are taking these risks.
I am well aware that travellers' tales, the tales of Ministers and others when they come back from these countries, have to be examined very carefully. It is possible for one to have one's leg pulled—or perhaps I should say that the attempt is made frequently—about what our competitors are doing in respect of credit. It is very difficult—one of my hon. Friends was talking about this to me earlier on—to establish the facts. The only yardstick is: what are the results? We know, for instance, that in West Africa Germany has been securing a share of trade which is slightly alarming. Therefore, I say that this is a matter which will justify much more examination and the contemplation of additional risks.
I remember a tale which I picked up when I was in Tokio three years ago. I could not substantiate it, but I reported it to the Board of Trade. I was told that the German Government were accepting through their exporters Germany's blocked currency. I got my information from a highly reputable English trading house in Tokio. The general proposition was that such blocked currency would become a Government responsibility and that in their major inter-governmental complex it would be possible for such blocked currency to be absorbed.
We are all deeply concerned about what has happened over the failure to sell the Trident aircraft to Japan. Like most hon. Members, I suppose, I know only what I read in the newspapers. I know that we have lost a very important order and are getting to the point when the Trident is depending on sales to our own domestic airlines. What are the reasons for the loss of that order?


It does not appear as though there was a technical advantage on the part of the Americans. From what one can understand, there would have been a saving, if Japan had purchased the British aircraft, of about £1 million in the total outlay. Therefore, what were the reasons for our losing the order?
It is a matter which must imply some credit aspects. It may well be that there were additionally advantageous terms over supplies of spare parts. It may have been that because of the close links with the United States and the vast amount of aid given to Japan, including expenditure on the Japanese armed forces, there was a desire on the part of the Japanese Government to reciprocate in this way. But I cannot get it out of my mind that somewhere along the line there has been a credit element in the loss of this extremely important order. The Minister will no doubt be aware that on the tape tonight there is a report that our exports of aircraft generally have suffered a rather severe reverse.
There is another point about small exporters. I have a feeling—this goes not only for E.C.G.D. but for other Government agencies which try to help the enterprising small company—that the facilities available to small companies are insufficiently known in the provinces. I am talking not about the big companies in the big cities but about the smaller companies on the trading estates in the provinces, many of which are specialising companies which could contribute individually in a small way but collectively in a most important way to our exports. It is my impression that easily read and understood information about E.C.G.D. does not permeate down to these smaller companies. It has been said that exporting is not much fun. Indeed, it is hard work. Also, many of the smaller companies cannot afford the overheads of an export department. I appreciate that the debate is not about exports in general but about the financing of exports in particular. Nevertheless, I think that the E.C.G.D. has an important part to play and is insufficiently appreciated by the smaller companies.
My right hon. Friend the Member for Battersea, North referred to the history

of the Department and said that there had been these rather frequent changes in its administration and overall expenditure. I do not think he was putting that in a critical sense. It is axiomatic that it must be a developing situation.
The hon. Member for Willesden, East referred to the increasing part being played by private export guarantee organisations. I do not take the view that we should be doctrinaire in saying that the private sector of financing of guarantees is more important than the public sector. I believe that the two things are complementary, but the fact is that many of the emergent countries—it is to them that we must look for our long-term development—will tend more and more not only to buy in the cheapest market without a sentimental view about where they secure their principles and attitudes of mind, but will more and more tend towards a collective economy among the small nations, and Government agencies at this end will have to reciprocate—

Mr. Skeet: My reading of the system is that it is a Government-to-Government matter. Other organisations can lend directly to commercial enterprises and stimulate private investment abroad, which is precluded by the Government plans.

Mr. Snow: I think that that is a slightly rigid reading of it, because in the emergent countries about which I am thinking, if they do not have it now they will soon be forced into some form of decentralisation of credit acceptance. At any rate, that is my view.
I should like to stress that the Government have continually underestimated the potential of the small exporter and the small manufacturer. When my right hon. Friend referred to some form of association of small exporters, I was reminded that I had made the same point in the debate on the Address—that there is room for a Government agency which could co-ordinate the potential of small exporters when they receive information of large orders which could be placed in other countries.
In conclusion, I pay tribute once again by the House to the most excellent work of the Export Services Department.

9.15 p.m.

Mr. H. Rhodes: My hon. Friend the Member for Lich-field and Tamworth (Mr. Snow) has put his finger on one of the important aspects of the subject which we are discussing tonight in saying that the powerful elements which are making arrangements to export to under-developed countries, particularly Malaysia, are making headway.
There is no doubt that the alliance of credit facilities, cheaper interest rates for manufacturers being prepared for export and the ease with which exporters can get their bills discounted in Japan all contribute to the ability of the Japanese to make a powerful impression on any market. This is precisely the point. The amount of export services which we have organised commercially as in E.C.G.D. to do a particular job is only a part of the whole as the Japanese see it.
Not only have the Japanese the facilitiese which I have mentioned, but they have the advantage of being able to export and import through a small number of hands. In fact, 5 firms look after 70 per cent. of the exports and imports in Japan and the remaining 10 firms look after the remaining 30 per cent. of exports and imports.
I do not blame the Japanese for this. If we are slow in getting off the mark, it is our own fault. When I was in Malaya a few months ago I found that the Japanese were busy as beavers offering a television service to the Malayans. They were offering not only to put it in but to run it, too. Think of the enormous advantages of the provision of services of that kind. I believe that the Japanese could make a great contribution in South-East Asia, and so could we if we were enlightened enough to have a go on similar lines.
As in the two previous debates, the hon. Member for Willesden, East (Mr. Skeet) spoke of the desirability of using the facilities which exist through E.C.G.D. or parallel facilities to export to South America. He mentioned various South American countries, including Brazil and Bolivia.

Mr. Skeet: I would make it clear that I made no reflection on the efficiency of E.C.G.D. I was merely indicating that

this was one of the difficulties which face exporters in dealing with South American countries.

Mr. Rhodes: I did not intend to suggest that the hon. Member was throwing doubt on the efficiency of E.C.G.D.
Not all that long ago a previous President of the Board of Trade made a journey to Bradford to an industry which is certainly holding its own and which has had an export record of 70 million this year. We cannot claim too much credit for the increase because of a factor which also applies when the Minister claims credit for the fact that exports are up by 7 per cent. in 1963; the element which is making our figures bigger is the element which is making his figures bigger—the fact that the cost of our raw materials is up by 25 per cent. The President of the Board of Trade went to Bradford and told a room-full of people, including myself, what fun it would be for them to export to South America. We are not exactly slow in knowing what are the good places to export to. We have had experience of doing it since mediaeval times. We do not need the E.C.G.D. or the Board of Trade to tell small exporters in Bradford what is a good risk. We have had generations and centuries of experience in this type of transaction.
What happened in response to that suggestion of the President of the Board of Trade? The Romans used to turn their thumbs down when they condemned a fellow. The Yorkshiremen in that room imitated the action of the right hon. Member for Woodford (Sir W. Churchill) in putting two fingers upwards in a stabbing fashion; and he never did make any headway with the wool trade after that.
In a facile way, people say that it is good to export here or export there, and they say how marvellous it is that the E.C.G.D. has done this and done that. Why should not it have done it? The E.C.G.D. is staffed by intelligent people. Their conditions of work are better than most. They have excellent facilities at their disposal and they have funds provided by the Government. All the Government need to do is to come to the Box and ask for what is necessary, and we all say "Yes" as quiet as lambs. Why should not they do well? They


are not unusual or marvellous people; they are just ordinary first-class administrators who are doing a job well.
Are we doing as good a job in our own particular ways? The N.E.D.C. makes a projection or a forecast—whatever it be called—of 4 per cent. growth and then, because of Government action almost immediately afterwards through the failure of the E.E.C. negotiations, the forecast is altered from 4 per cent. to 5 per cent. This puts an additional burden on people engaged in exporting to keep up. Not only that, we must make quite sure that we hold our share in an increasing amount of world trade. The signs are that trade between industrial nations is on the decline. The comments in the December Bulletin for Industry bear this out, and it is very wise to warn the country about these things.
This is what was said:
Exports of manufactures are of particular interest to the United Kingdom and the prospects are fairly good. World trade in manufactures may grow in 1964 at about the same rate as in 1961 and 1962".
One can make one's own judgment on that. It goes on:
This growth in 1964 is likely to have a different pattern from before. The rate of expansion of trade in manufactures between industrial countries will probably decline, reflecting the slowing down in the growth of imports into the main continental European countries. On the other hand, exports of manufactures to primary producers may be growing as fast as exports to industrial countries, a phenomenon which has not occurred since the recession in 1958.
If that means anything at all, it means that the provisions for which the Minister of State is asking in Clause 1(2) may have to be increased before the end of 1968. If that kind of pattern is to emerge as one likely to continue from one year to another, undoubtedly he is quite right in asking for more under Clause 1(2) and could be right in asking the House for more later.
I come now to one or two questions to the hon. Gentleman. The first follows the comments of my right hon. Friend the Member for Battersea, North (Mr. Jay), who, I thought, gave a first-class analysis of what we are talking about. My right hon. Friend spoke of the bank guarantees. I think that it was the F.B.I. which made some criti-

cism about the minimum amount being £100,000. I put to the Minister of State a practical instance. If an exporter had, say, a £64,000 job for one destination and a £40,000 job for another, could those two figures be brought together in some way so that the facilities with respect to the guarantee could be taken up?
I had a comment about the simplified policy for the small exporter, but I think that that has been adequately covered. It was encouraging to hear from the Minister of State that 1,500 had taken advantage of this type of assistance.
I turn next to what are known as matching terms. It has been found, in days gone by, that there has been a considerable disparity between our terms and the terms offered by, say, America, Japan or Italy, which seem to be the three which are prone to go in for competition in this connection. Is it a fact that when a proposition is taken by a businessman to E.C.G.D. he has to prove off his own bat whether or not in the market to which he intends to export there are being offered better facilities by some other country? Has he to establish proof? Or do we have anything in the way of a reliable, first-class service which is gathering this information from abroad all the time?
I do not think myself that we get the full benefit out of this debate on E.C.G.D. It is a very prosy and self-congratulatory festival. All we do is come along and say how marvellous we all are: at last we have discovered that the Government can run a Department and make a profit. Now, if only we could build this Department into the kind of organisation which would match the Japanese in flexibility, in supplying information about world markets, about questions of the decline of the older industries or the acceleration of the new—whether, we are getting our share of exports in which world trade is growing. We should get down to methods to analyse these things, with a strong organisation alongside E.C.G.D. I am perfectly certain that unless we do we shall lose our place as exporters in the forefront of industrial nations.
It is not the job of the Department to do any of these things. I do not know whose job it is. When we have a debate on exports, usually the normal type of


export problems are discussed, with perhaps an occasional reference to E.C.G.D. I think it would be a good idea some time to discuss machinery which would lead to better exports. I leave it at that, because I feel I am getting to the end of my speech and my ability to keep in order.
I would finally ask the Minister of State whether he would from time to time publicly and firmly deal with statements in the Press that suggest the inefficiency of this Department. The British machine tool industry published a document in November last year and in one paragraph about export policy it says:
It still remains true that in fair trading conditions coupled with the existing recognition by British manufacturers of the need for designs acceptable to the customer"—
we could say something about that in another connection—
there is every reason for the industry competing successfully on technological grounds. What frustrates the individual manufacturer is his all too frequent experience of political and non-commercial factors which thwart his efforts to export and simultaneously provide opportunities for his European competitors".
That seems to be loose generalising, perhaps. We are entitled to be told whether it is or it is not. The document also speaks of
sources which have stronger governmental support than is given in the United Kingdom".
and of the
serious distortion of trade caused by the tying loans granted to the emergent countries".
What is this? An excuse, perhaps, for some neglect of their own? It may be not.
The Financial Times yesterday on this Japanese Boeing deal said:
Finance has also played a major rôle. Reports from Japan yesterday suggested that the British had offered financial arrangements to the Japanese airlines but Boeing had come back later with a better offer. Details of the financial plans were not revealed.
I do not know anything about it. The Government may or the Government may not.
However, wherever it is possible to disprove some of these suggestions about our inefficiencies in this field I would ask the Minister of State to deny them.

9.35 p.m.

Mr. John Diamond: My hon. Friends who have preceded me have spoken with great personal knowledge of the problems of exporting, far greater personal knowledge than I could possibly adduce in this discussion, and it is always valuable to hear their comments at first hand. Like them, and like the hon. Member for Willesden, East (Mr. Skeet)—the only Member on the other side so far to have spoken in the debate—all are concerned with the same point, to help exporters to export. In order to put the matter in what I regard as its proper perspective, I want to say this, that the way to help exporters to export is not to encourage them to lean unduly on preferential assistance but to stand on their own legs, and to think about exports morning, noon and night. There is still plenty of evidence to show that the medium and smaller British firm does not think sufficiently about the need to export the whole time.
I was encouraged to receive only today—no doubt other hon. Members received the same publication—the official journal of the Institute of Exports which tells us two interesting stories. The first concerns a West Country firm which made it known that in future it would refuse to deal with any export inquiry unless it was accompanied by a stamped addressed envelope. This is an attitude which I accept exists. Those with professional responsibilities similar to mine know full well that the British attitude to exporting has still by no means caught up with the average German, Frenchman or Dutchman, who do not mind in the slightest whether they operate from, say, Holland or Britain, because it is all the same to them. Their markets are far flung and it matters not where the head office or centre of operations is.
The attitude in Britain is different. The man in the British firm has been encouraged for far too long by a solid home market and reliable export markets. He has not gone out for orders but has received orders. As the example which I have given shows, he will not deal with inquiries unless they are accompanied by a stamped addressed envelope. I appeal to the Government to continue with the work which has been done previously and which I hope will continue in encouraging in every possible


way the medium and small firm which has not made full use of available facilities to think about exporting more.
The second example is one in which hon. Members will be particularly interested. It concerns an advertisement for an export supervisor with
a thorough knowledge of export procedures, including shipping, documentation and customs drawback claims".
The applicant must be between 25 and 40 years of age and for this man, with all his experience—and his age obviously would be nearer 40 than 25 if he had accumulated all this experience—the salary offered is between £800 and £850, slightly more than the salary of a shorthand-typist or about as much as that of a good secretary; or, to put it in more homely terms, about the average net amount which a Member of Parliament receives after the deduction of tax, expenses, and so on.
I repeat that there is still plenty of evidence to show that more needs to be done to encourage manufacturers and merchants to realise that there is a market for their goods and that, although these matters are a bit complicated at first, they become easy subsequently. I go further and say that they should realise that the world is opening up in respects which they have not, perhaps, anticipated. There are many more areas to which exports can be sent than was previously the case.
I was surprised by a publication of one of our banks, Barclays, which is a perfectly reasonable bank. It made an objective assessment dividing the world into nine trading areas of export opportunities. It put the E.E.C. and E.F.T.A. at the head and next the Eastern bloc. It said with regard to the Eastern bloc that the immediate outlook was reasonably promising, which is a better estimate than applies in the case of the others, apart from the Six and the Seven. With regard to delays in payment, the word used was "none".
There are many people who do not realise that these possibilities are open. There are certain difficulties and technicalities, but it is because there are these difficulties and because people fall down when dealing with them that we have to encourage them more and more to realise that exporting is essential and

vital and that it is well worth while to overcome the difficulties.
Nevertheless, having said that, I share the view that every speaker has expressed that it would be utterly wrong for any of our manufacturers unnecessarily to be put at a disadvantage in terms of guarantees or interest with their overseas competitors. This is happening and a specific instance which I want to discuss, although figures are difficult to discuss across the Floor of the House, is the case of the aircraft industry, because I have had detailed figures supplied to me by the secretary of the Society of British Aircraft Constructors. They have already been supplied to the Minister of Aviation, and correspondence has been going on which has not reached a satisfactory or agreed conclusion.
I hope that the Minister, who brings experience both from the Treasury and now in his present position as Minister of State, will be able to look into these figures and see how we can help. Although there has been some contradiction by the Ministry of Aviation, it has not been fully contradicted. In comparison with America, which is exporting aircraft against us—and we have two very recent cases which my hon. Friends have indicated—although the agreed terms and the guaranteed terms are not known, they may have entered importantly into the unsatisfactory result. It is alleged that we are at an unnecessary disadvantage with our American competitors in the sale of aircraft to third markets.
In the United Kingdom"—
and I am now quoting from a letter of July, 1963, and the terms may have altered slightly since then—
we borrow at 6 per cent. per annum (5½ per cent. for maturities up to five years, 6½ per cent. for later maturities—on 7-year credit this works out at 6 per cent. overall), but in addition we pay to E.C.G.D. and our bankers up to a further 6·6 per cent. of the contract price, which in terms of a rate per annum is equivalent to 2¼ per cent.—a total in all of 8¼ per cent. per annum.
It is the all-in-all figure which matters, because the customer totals this up to see how much he has to pay to potential exporter A and to potential exporter B. That is the British position.
Now we turn to the American position where this is at least 2 per cent. less,


which in terms of a number of large aircraft which sell at £2 million a time is a very relevant figure indeed. What S.B.A.C. are saying, after a most careful reconsideration, is exactly what I suggested in a speech I made as early as May of this year, that the fundamental cause of this is not necessarily E.C.G.D. at all. It is because of the supply of the money in the first place at higher interest rates which is borne here as compared with the cost at which the American Treasury makes the money available in the first place.
The net result is that we compare something like 8¼ per cent. with about 5¾ per cent.—in some cases a spot more—with the Americans in this instance. That is a minimum of 2 per cent. difference and, in some cases, of 2½ per cent.
The figures are detailed and I will not bore the House with them. However, the comparison I have made is as fully documented in terms of aeroplanes as can be the case. It has been supplied after the most thorough consideration by the Society of British Aircraft Constructors. I have a considerable constituency interest in this matter, but all hon. Members are interested in the sale of aeroplanes. Things have been going very much the wrong way recently and most hon. Members who have spoken today have referred to this subject.
I do not expect the Minister of State to give a full answer to these points tonight. I will be grateful to him if he will prefer the other course and look at the matter with the care that is appropriate to the circumstances which possibly have lost us export orders in aircraft and which, if not altered, may continue to do so.

9.46 p.m.

Mr. du Cann: I will, by leave of the House, do my best to reply to the points that have been made in this fascinating and constructive debate. I am sure that those who have listened to it right through will be grateful for the contributions that have been made by hon. Members on both sides. After all, we share a common interest—the promotion of exports and the improvement of facilities for British exporters. We wish to do this, but, as the hon.

Member for Gloucester (Mr. Diamond) pointed out, not too far because nobody wants to be spoilt. All that any Englishman should ever require is a reasonable opportunity and fair competition.
The snag to my replying tonight is that so many and varied have been the points raised that I doubt whether it is possible for me to answer them all. None the less, I will do my best within the compass of a short time to do so, and I would like to assure all hon. Members that the points they have raised I personally have greatly valued and the Secretary of State and I will do our best to pay strict attention to them in the future.
Since those concerned are not in this forum able to speak for themselves, I can inform the House of how grateful the Council and the Department will be for the kind things that have been said about them. As the hon. Member for Ashton-under-Lyne (Mr. Rhodes) rightly said, this is not a moment for self-congratulation and they would not accept the praise which has been properly accorded to them in that spirit. However, I believe that they will go forward in their tasks fortified in the knowledge that tonight, as always, they have the goodwill of the House.
The right hon. Member for Battersea, North (Mr. Jay) did a leg-pulling exercise, if I may call it such, about this splendid State corporation. He will not wish me to reply to that point in detail, other than to say that it has always seemed to me that the E.C.G.D. is not a wholly State corporation. It is more a joint partnership between the State and private business. Whatever may be said on this score, so long as it is effective I do not mind who founded it.
There are certain risks that the State should take, particularly when the scale of business is becoming so vast and complex. There are private enterprise organisations in this sphere which are also doing a useful job, but the point is not who does the work but rather that it should be done effectively. While the constitution of the E.C.G.D. is not a matter for argument tonight, I do not regard its present constitution as fixed necessarily for all time. If we find that we can change its constitution and organisation in such a way as to make it more effective in the future, we should


not hesitate to do that. I do not suggest that we have these great changes in mind at the present time—far from it—but certainly let us be flexible in our thinking, as I can assure the House, we are at the present moment.
Another point that the right hon. Gentleman quite rightly raised was that of improvements in E.C.G.D. activities. He suggested, and I make no quarrel with him on the suggestion, that it was, perhaps, the custom for Ministers of State, of whom there seem to have been an unholy succession, if I may say so, to say that nothing further is really desirable and then to come along a few months later and propose alterations. Whether or not that is so in detail, I am not quite clear—I should have to do a great deal of research, extending, no doubt, to 1945—but that is not the point.
The point is that I am not sitting here secretly yearning to make improvements and being inhibited by my old friends at the Treasury with whom, I am glad to say, I remain on the most cordial and happy terms. That is far from being the case. It is the aim and ambition of the Board of Trade, severally and jointly, to find ways, if they exist, of improving the facilities of E.C.G.D, without argument and without dissension. As long as I remain Minister of State, so long shall that be done.
A further word was said by the right hon. Gentleman on the subject of exports and imports. He was quite right to draw the attention of the House to the figures, which are very interesting and will well repay study. It is splendid that exports are 7 per cent. up on last year, but I say at once that it is not enough. We must have a further expansion in 1964, and as far as the Government can influence matters or, at any rate, encourage a spirit in which existing exporters will be more active and new exporters come into the field, that we shall do.
I am not so bothered about imports at the present moment. I think that it is too early to make a specific judgment there. A degree of the import bill is due to restocking, and if certain manufactured goods are purchased by United Kingdom manufacturers of one sort or another because the equivalent manu-

facture cannot be obtained in United Kingdom markets, I hope that the shock of competition will do other United Kingdom producers a lot of good.
It may be necessary to look seriously at imports as the year goes on, but it is precisely in order to accommodate this restocking period that my right hon. Friend the Chancellor of the Exchequer has arranged what one might call an overdraft—the new working capital facilities with which the House is familiar. I would not, therefore, say that at the present time I am necessarily bothered about the import figure, although I agree that it requires to be watched, but I hope that in 1964 we shall see exports continue to rise, and rise at a substantial rate.
I liked what the hon. Member for Ashton-unda-Lyne said about exporters; it struck me that his whole mood and spirit was one of, "Let's go. Let's not have silly exhortations"—

Miss Alice Bacon: Hear, hear.

Mr. du Cann: The hon. Lady presumes far too much. It is, I know, a woman's prerogative always to presume. The hon. Lady does so with much charm, but is most terribly wrong in the narrow field she was considering. In the field of exports, certainly, "Let's go."
As the House knows, I have recently been abroad for a very short time. I had four days in Venezuela and four days in Trinidad. In Trinidad, I met a man who had in the course of the previous ten days been in Montreal, in Washington, in Houston in Texas, and then in Trinidad. In each place he had done business with great profit to his company. In each place, as I understand, he had been to see the local Board of Trade representative before making his calls, which had previously been well prepared by his company. As a result, they were more effective. I thought that this was more typical of the new attitude of the British businessman than is sometimes suggested by some people who should know better.
Exporting is extremely hard work. It is a difficult and arduous business. There is only one way to sell, and that is to get off one's backside behind a


desk and go out in the field. This is why the Board of Trade provides overseas services, and we are always delighted to know that these services are used or to hear how we can improve them. The attitude of British business, small or large, is infinitely better than it was, and I think that our people deserve great congratulation on all they have done. The House certainly wishes them success in future and is always ready to do what it can to help them.
The hon. Member for Lichfield and Tamworth (Mr. Snow) raised the question of markets. There is no market of any size in the whole world for which the E.C.G.D. provides no cover at all. The degree of cover is bound to vary according to risk-worthiness, but that is a matter of fact. The hon. Member spent a good deal of time talking, quite rightly, about the small exporter. There is a lot that one could say on this subject. There are great problems possibly in encouraging the small exporter too greatly, because he is not in a position necessarily to provide after-sales service of the kind so often necessary in certain markets. Nevertheless, he has a great contribution to make. I hope that the figure of policies taken out by small exporters, which is 1,581 since the scheme started2½ years ago, is some indication of the progress made in this field. I want to talk in a moment about publicity and what is done in particular to try and bring the services of the E.C.G.D. to the attention of small exporters. I will not deny that there is a great deal to be done in education and that this is important and urgent.
I hope that we shall be able to increase trade with the Eastern bloc, a subject which was also raised by the hon. Member for Lichfield and Tamworth and the hon. Member for Gloucester (Mr. Diamond). The prospects at present look good and there is no earthly reason why we should not do this. The Secretary of State has been clear about the intentions of Her Majesty's Government. I hope that as time goes by in the next several months it might be possible for us in various ways to indicate to the House the positive things which we may have achieved.
The hon. Member for Gloucester particularly mentioned aircraft. It may be

that I misunderstood his figures. I had thought that the highest rate of premium in this case was only 5 per cent., but the hon. Member was good enough to invite me not to reply in detail at the moment and, therefore, I shall not. On the other hand, I promise him that I shall look at the matter with care. Like the hon. Member for Lichfield and Tamworth, who also mentioned the problem of aircraft, nothing has annoyed me more in reading the newspapers in recent months than to read about the way in which we have not been able to secure orders which the excellence of design and workmanship of British aircraft have deserved our obtaining in world markets. This is a serious matter.

Mr. Jay: Is there not a good deal of evidence that finance in some form or another has been the obstacle?

Mr. du Cann: Newspaper comment immediately recently has suggested this, but I do not feel that I am sufficiently well informed on the subject to give a firm opinion one way or another. I shall put myself in a position as best I can to make up my mind and to take positive action if such be open to us to deal with the matter.
The hon. Member for Ashton-under-Lyne asked a question about grouping orders. Some day I should like to write to him and answer fully. This was a question asked of us by the F.B.I. who pressed us very hard to make relaxations. We have asked them in turn for clear evidence of a shortage of finance in this field. The subject, therefore, is under discussion.
I come to a further point raised by the right hon. Member for Battersea, North on the breakdown of the total of actual liabilities and potential commitments under Section 2. This matter is difficult to follow, but I have a note to which I should like to refer. At the end of December, 1963, of actual liabilities under Section 2 of £391·1 million—

It being Ten o'clock, the debate stood adjourned.

Ordered,

That the Proceedings on the Export Guarantees Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[The Attorney-General.]

Question again proposed, That the Bill be now read a Second time.

Mr. du Cann: Of the figure of actual liabilities of £391·1 million, £81·6 million was in respect of financial guarantees; £116 million in respect of other guarantees issued and accepted offers of cover; and £193·5 million disbursements under economic assistance loans. Out of the total potential commitment of £453·9 million, £287·3 million related to financial guarantees approved in principle but not yet issued; £14·3 million offers on other guarantees; and £152·3 million to undisbursed portions of economic assistance loans and prospective loans which have yet to be signed. I think that if the right hon. Gentleman will be good enough to look at those figures, he will find that they give him the information he wanted.
My hon. Friend the Member for Willesden, East (Mr. Skeet), whose contribution we all so much welcomed, spoke, among other things, about investment guarantees. This is primarily a matter for my right hon. Friend the Chancellor of the Exchequer, but as I have had my leg pulled about having been at the Treasury for a brief but I hope not undistinguished period,—

Mr. Diamond: The hon. Gentleman's period of office in that appointment will prove to be nothing like as brief as his stay in his present office.

Mr. du Cann: I am very fond of the hon. Member for Gloucester, but the one characteristic of his which I regret is his pessimism.
On the subject to which I was referring, I shall draw the attention of my right hon. Friend to what my hon. Friend said, but I am bound to point out from my previous experience that in the past the Government have always felt unable to give investment guarantees, partly because they are apt to lead to a diversion of investment from what one might possibly consider more desirable locations, and because investment overseas in any case forms a considerable strain on our balance of payments, amounting to no less than £300 million at current figures, so I would not hold out any hope for my hon. Friend that there is likely to be progress here.
I was interested to hear what my hon. Friend said about documentation. I was horrified by some of the examples he gave of South American practice. On the question of home documentation. I think that

the E.C.G.D. goes to substantial lengths to make this as tolerably simple as possible. If my hon. Friend accepts, as I believe the House does, that much of this work of selling overseas is very much more complex than it used to be and that this complexity is likely to increase, and if he accepts, too, that many of these projects are for larger sums than have ever before been considered, inevitably the degree of information which the E.C.G.D. must have as a minimum must be substantial. That really is the basic point. If my hon. Friend, or any other hon. Member, has specific examples of excessive E.C.G.D. paperwork. I hope that I shall be informed, because we shall be ready to look into the matter.
On the subject of the amount of documentation required by certain countries with regard to exports, I know that this presents problems for the exporter. The Government have played an active part in international discussions directed to reducing export documentation as far as possible, and I assure my hon. Friend that we shall continue to do that.
I turn now to the question of the F.B.I. Memorandum I have here, which I read with great interest, together with the allied newspaper comment. It was one of the things which, soon after my appointment I had the opoprtunity to discuss, in particular with the Secretary of the E.C.G.D. There are many points about that report, and the right hon. Gentleman mentioned three main ones. Perhaps I may make some general observations about it from my experience of having looked at it and discussed it.
The F.B.I is a most important body, and anything that it suggests must be taken very seriously. We did take the report very seriously. On the other hand, there were certain errors of fact in it, and we thought it appropriate to have certain discussions, in general and not formally, with the F.B.I., as a result of which I believe that there is a better understanding on both sides about the problems and difficulties involved. I am delighted that the E.C.G.D. should have had the opportunity to put its side of the question to the F.B.I., on a number of these cases, for that knowledge, in the hands of the F.B.I., can be nothing but beneficial, in general, for obvious reasons.
It is not a question of not caring for criticism: that is not the point.


Criticism is welcomed. But a number of suggestions made by the F.B.I.—which the right hon. Gentleman was himself careful to avoid—were not accurate as matters of fact. To some extent that blunted the value of the document and of the surrounding comment.
On the question of cover for exchange rate fluctuations, this is obtainable through the well developed existing market, where a large measure of protective cover can be obtained. It is always possible to deal forward in the foreign exchange market. We feel that in general this goes far enough, but I would welcome any evidence from the right hon. Gentleman or anyone else to the contrary.

Mr. Jay: Is it possible to deal forward for more than a rather limited period, usually counted in months?

Mr. du Cann: It depends very much on the currency and the type of operation.

Mr. Rhodes: Does that cover dollar fluctuations?

Mr. du Cann: Yes. One can deal forward in the dollar market without doubt. The rates are quoted every day in the financial Press. But if there is substantial evidence which shows that in some cases this is a genuine handicap to exporters, I should like to hear more about it so that the matter can be properly investigated.
I now turn to the question of matching, which was mentioned by the hon. Member for Ashton-under-Lyne and which was also a point in which the F.B.I. were interested. This involves obtaining evidence of competition, as distinct from vague allegations seeking to play off one supplier against another. We recognise that the difficulties in securing evidence may be formidable, but our own inquiries do not bear out any contention that evidence is impossible to obtain. In fact, we have found the position to be rather the reverse. We are ready, through our embassies overseas and our Berne Union contacts, to investigate promptly and extensively any allegation which comes our way. The fact that we have done this in 370 cases since the introduction of matching cover, in October, 1960, is an earnest that we are

able to deal practically with the situation through these avenues. I could say a great deal more on that point, but I will pass from it.
I now turn especially to matters raised by the hon. Member for Ashton-under-Lyne and the right hon. Gentleman, and the suggestion that the E.C.G.D. should be more favourable to "selected markets", "selected customers", "split risk" and "reduced percentage of loss" cover. These are important subjects. The F.B.I. suggested that selected market terms are heavily weighted in favour of whole turnover. On examination, we find that in general the whole turnover requirement is a reasonable one. "Selected markets" policies, on the other hand, are freely available, provided the markets offered to us give a reasonable spread of risk. This is essential in order to keep the E.C.G.D. on a sound commercial basis. Rates are never more than 30 per cent. above standard whole turnover rates. This is not excessive. As for cover for split risks, it is difficult to determine whether a particular loss is due to del credereor to a political risk. The right hon. Gentleman will understand the force of this point, as will the hon. Member for Ashton-under-Lyne, with his substantial experience of overseas markets, some of them very difficult ones. That to cover split risks would both increase costs and reduce the value of the policy as security for banking advances is a point which should not be ignored.
After those short comments, let me go on to the other point which was made. It was suggested that there was a good case for lowering the minimum limit of £100,000. This has been discussed with the F.B.I. on several occasions, and I hope it has been made clear to the F.B.I. that we should not be justified in making this alteration without evidence of shortage of finance in the field for which bank guarantees are not available. If such evidence is produced we should be ready immediately to consider it. I can be quite clear and certain that that would be done.
I had a memorandum prepared which summarised the points made by the F.B.I., and I have been looking at that with some care in the last few days. I am satisfied that, in general, a number


of the points made by the F.B.I., though valuable, are probably not points on which we could justifiably take action at present. But our minds remain open about every one of them, in so far as they do not result—as did one or two—from an honest misunderstanding of the position.
A great deal was said about aid, a fascinating subject which we debate in this House much too rarely. We had the splendid White Paper which contained many striking points. But we have not had—for good reasons—an opportunity to thrash out the matter in detail. One suggestion was that we should take greater risks in our aid policy. It is our feeling that we already take great risks in certain territories. Obviously, I do not wish to name them. But I think that the House will be with me to some extent over this and I urge hon. Members not to underestimate the position.
There is a limit to what we can do physically. Our aid is running at a record total. The precise figure for this year is not yet known but it is around £200 million. It may be a little below that figure because there is always the problem of the pipeline. But there is a physical limit to what we can do with the best will in the world. Nor do I think we should resent in any way the fact that other nations sometimes step in to assist countries which need aid. I do not resent the fact that, for example, the Americans, the Japanese, the French and the Italians have come into territories which were formerly British Colonies. If that be good for those territories, I say that it is fine.
I am concerned—the point was made by the right hon. Gentleman—to see that we get our fair place in the sun and are not squeezed out unfairly or unnecessarily. Aid to independent Commonwealth countries increased two-and-a-half times between 1958–59 and 1962–63, from £25·8 million to £62·3 million. In the Queen's Speech it was made clear that it was the policy of the Government to have an expanding programme of capital aid and technical assistance.

Mr. Jay: Surely the Minister will agree that it is disquieting if, for instance, the proportion of India's imports coming from this country is steadily going down?

Mr. du Cann: I do agree. It is not for me to decide these matters, but I hope that we may have the opportunity to debate the whole subject of Commonwealth trade. I am sorry that tonight we are talking about E.C.G.D. and not that particular thing. But the reasons are well understood. However, I look forward to such an opportunity. It is essential that this House should get down to a detailed examination of the reasons why we are not doing as well in Commonwealth trade as we should all wish to do. Those reasons do not necessarily result from our own faults of commission. But there are facts which ought to be looked at seriously and remedies provided.
Section 3, in relation to loan distribution, gives what, I think, is a misleading picture of distribution of aid. It is only a quarter of the total. So much of our aid, to the Commonwealth especially, is given through C.D. and W. Acts. The great bulk of our aid to Africa is given in that form.
On the other hand, my hon. Friend, the right hon. Member for Battersea, North and the hon. Member for Lichfield and Tamworth talked about Section 3 aid, and I should like to go through that very quickly. It would take much too long to give details of all the loans made under Section 3 in the past 15 years. There have, in fact, been 54. I will ensure that the hon. Gentlemen concerned receive detailed in formation but I should just like to summarise the position now.
The 54 loans, agreed for 21 countries, total almost £350 million. India received 16 loans totalling £193 million. Pakistan has received seven loans totalling £47 million. Pakistan has, in fact, done second best. Other loans have been agreed with Yugoslavia, Nigeria, Ghana, Sudan, Iran, Chile and Turkey, each receiving two or more loans.
Part of the aid dealt with the surplus capacity provisions which the House welcomed. All those loans have been made to Governments. On the other hand, some have been made to public bodies but guaranteed by Governments. Most of the loans were made after the Montreal Commonwealth Trade and Economic Conference in 1958, when there was a move forward in Imperial loans, if I may use such a term, and all of them were tied to the purchase of


British goods and services. Disbursements have risen from £5·7 million in 1957–58 to £40·5 million in 1962–63.
A good deal has been said about terms. There is an increasingly difficult task for some developing countries in servicing their external debt. This has led to extending the length. The longest term yet granted is 25 years, including an initial grace period of seven years before repayment of principal begins. The rate of interest charged is the rate at which the Government can borrow for comparable periods, plus a fixed management charge, usually ¼ per cent. As a further means of assistance to developing countries, we are always ready to consider waiver of interest payments where the economic circumstances of the recipient justify this. We have done this with recent loans to India, Pakistan and Turkey. A waiver of interest of 7 years offered to India and Pakistan in 1963 is equivalent to halving the interest charge, and that underlines the importance of the grace period.
On the subject of Latin America, my hon. Friend the Member for Willesden. East may know that I have just returned from Venezuela. It was a short visit and not a world tour such as someone suggested that Board of Trade Ministers were in the habit of making. I feel that there would be great and continuous advantages if more hon. Members were able individually to travel and put the British point of view abroad, because it is far too little understood. I am certain that the opportunities in Latin America are good. We have had a disappointing experience there in the past but I do not think this should prevent us from taking advantage of taking good opportunities where they exist.

Mr. Skeet: At least two or three Ministers have gone to South America recently, and the Section 3 loans are very minute for that part of the world. If we take our total investment there on Government account, it is next to nothing compared with our investments in Africa and Asia. If we want to encourage our trade with South America, ought we not to do more about it?

Mr. du Cann: My hon. Friend interrupted me before I had finished what I was saying on this subject. There is one point of principle that I want to make,

that the claims on our resources are very great. I have said that our resources are not inexhaustible. I am old fashioned enough to think that when we have capacity which we can spare we should first consider the claims of our old friends in the Commonwealth, and I would hope that after that it might be possible in future to do a little more for the Latin American territories; and if that is possible, my hon. Friend will certainly be hearing about it.
The hon. Member for Lichfield and Tamworth asked about information. He has now left the Chamber, which perhaps saves me from saying as much as I had intended to do. On advertising we spent £60,000 a year in E.C.G.D.—with good results, I think. Many hon. Members will have seen the advertising. I thought it first class.
As to calls on exporters, in the 12 months ending in October officials from our 16 branch offices made nearly 28,600 calls on exporting firms, nearly 13,000 being uninsured firms, to introduce and explain their facilities. A good deal of work has been done with trade associations. There are 350 accredited brokers on the panel.
With regard to banks, in July, 1960, a new booklet was produced called "E.C.G.D. and the Bank Manager" and 10,700 copies were supplied to the main banks head offices within a few weeks, and copies are now issued on request. In the year ending December, 1962, 3,500 copies were issued. In addition to that booklet we have produced a number of publications, which are, incidentally, available in the Vote Office, to explain the advantages of these facilities. In 1962, 40,800 were distributed, including 10,000 copies of the main booklet "Payment Secured". We shall produce a new comprehensive booklet dealing with E.C.G.D.'s development, and it will be called "E.C.G.D. services; the British Government's credit insurance facilities for exporters". This will be available, I hope, in the fairly near future. As to editorial comment, I am advised that during the year ended 31st October, 1963, we noticed 618 mentions of the credit insurance facilities provided by the department in the British Press.
One could go on for a long time discussing the various ways in which we endeavour to bring the services of


E.C.G.D. to the notice of present and potential exporters. I thought the other day that the summit of publicity was reached when my photograph appeared in the newspapers signing the loan agreement with Chile for the purchase of ships, which came under the Chancellor's surplus capacity scheme. The only unfortunate thing I have to report to the House is that I am not aware that any increase of business has resulted since. However, I quote the example to show that in every way we do what we can.
I have very much enjoyed this debate on the subject of exports and E.C.G.D. I am grateful for the welcome which the Bill has received. Those questions which I have not been able to answer in the long time I have spoken in winding up the debate I will do my best to answer in other ways. I wish again to assure the House that if there are constructive ways open to us in the future of improving the services, either of the Department which I have the honour to serve or of E.C.G.D., we shall be only too ready to take them. The whole House has been united in approving the Bill in a generous way. If any hon. Member knows of ways in which he thinks we could improve these services, I hope that he will not hesitate to let us know.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. I. Fraser.]

Committee Tomorrow.

EXPORT GUARANTEES [MONEY]

[Queen's Recommendation signified]

Considered in Committee under Standing Order No. 88 (Money Committees).

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Resolved,

That, for the purposes of any Act of this Session to amend the Export Guarantees Acts 1949 to 1961, it is expedient to authorise any

increase in the sums which, under section 3 or section 4 of the Export Guarantees Act 1949, are to be or may be paid out of moneys provided by Parliament, charged on or issued out of the Consolidated Fund, raised by borrowing or paid into the Exchequer, being an increase attributable to provisions of the said Act of this Session—

(a) raising to one thousand five hundred million pounds the limit imposed by section 1 of the said Act of 1949, as amended, in respect of guarantees under that section and related transactions;
(b) raising to one thousand three hundred million pounds the limit imposed by section 2 of the said Act of 1949, as amended, in respect of guarantees under that section and related transactions;
(c) extending the application of the said sections 1 and 2, and section 2(1) of the Export Guarantees Act 1957, by treating the Isle of Man and the Channel Islands as if they were part of the United Kingdom.—[Mr. du Cann.]

Resolution to be reported.

Report to be received Tomorrow.

COUNTRYSIDE AND TOURIST AMENITIES (SCOTLAND) [MONEY]

Resolution reported,

That, for the purposes of any Act of this Session relating to the countryside and tourist amenities in Scotland, it is exppdient to authorise the payment out of moneys provided by Parliament of—

(a) grants towards expenditure incurred or to be incurred by any person in carrying out work which in the opinion of the Secretary of State is calculated to preserve or enhance the natural beauty of a country locality, to restore or improve the appearance of land in a country locality, or to improve the facilities available in such a locality to members of the public for enjoying the countryside;
(b) allowances to members of a Scottish Tourist Amenities Council established under that Act;
(c) any administrative expenses incurred by the Secretary of State under that Act; and
(d) any increase attributable to that Act in the sums so payable by way of Exchequer Equalisation Grant under the enactments relating to local government in Scotland.

Resolution agreed to.

MR. ADRIAN AYRES

Motion made, and Question proposed, That this House do now adjourn.—[Mr. I. Fraser.]

10.25 p.m.

Mr. Dan Jones: I want to bring to the attention of the House the case of Mr. Adrian Ayres, who is a citizen in the county borough of Burnley and at the moment is a very despondent and unhappy man. I should like to outline the cause for that state of affairs. First, he wishes to make upon the Home Office and the Government a claim for an ex gratiapayment in lieu of compensation for wrongful arrest. I should like to recount the facts of that unhappy affair.

He spent three months in Her Majesty's prison with a capital charge over his head. We should pause there a moment and realise that this was indeed a terrible position for him to be in. At Lancaster Assizes on 22nd May, 1963, he was acquitted after a trial lasting only one-and-a-half days. I would draw that fact to your attention, Mr. Deputy-Speaker, and to that of the House, because that fact alone establishes this as a very exceptional case.
I will not go into it in too great a detail, because I am not a lawyer. Nevertheless, my researches entitle me to say that the very fact that this man Adrian Ayres was acquitted on the direction of the judge and not merely found not guilty by a jury is a very important point. Indeed, I am entitled to say that at that point he could have been declared an innocent person and not a person found not guilty. I hope that the Home Office will bear that very important point in mind.
This man's anguish while in Her Majesty's prison was made worse by the knowledge that his wife was pregnant. It was a terrible ordeal, and yet Ayres, who has pressed me on a number of occasions, and I believe with every justification, bears no malice to the police or to anyone else. But there is no doubt that, as a result of his imprisonment and the emotional strain, he suffered considerably. In the six weeks following his discharge at Lancaster Assizes he was a

sick man. He had a nervous breakdown. He lost his employment. I am certainly not blaming his employers; the man obviously had become very much less efficient. He claims that during this very anxious period when he had to undergo this terrible strain his financial losses amounted to some £300. That £300 was in debts of various descriptions which relatives had paid in homage to him in this very trying position, and included rent arrears—and we can imagine the position at home, with his wife in the condition I have already described.
Mr. Ayres has pressed his claim on me and I have here a letter in which he wanted me to take up his case with the Prime Minister. I knew perfectly well that if there was a means of deciding his case in any terms satisfactory to him this certainly would have been—I say this with respect to the Prime Minister—rather the better way.
I am comforted in bringing this case forward because I find that if the Home Office looks upon this case with any degree of compassion—and I feel it ought to—it will not be creating any precedent. That, I think, is very important. I find that in the last ten years eight people have been so treated, and that the sums of compensation have been from £80 to £400. I would not want to attempt to put the Home Office in the position of creating a dangerous precedent, though I am realist enough to believe that I would not succeed if I tried; but the precedent has already been created. Thus no precedent can be created, inasmuch as these eight cases have been established in the last ten years. Thus with that, coupled with the knowledge that this is undoubtedly an exceptional case, for the reasons which I have already dwelt upon, I think we can see that Mr. Ayres, who now feels he has been denied justice, can receive it. I appeal very much to the spokesman of the Home Office tonight to give very serious consideration to that indeed.
I want to make some reference to the background of this man who has suffered such an unhappy period in his life. He has never at any time been in any trouble with the police in any part of the country. He possesses an honourable discharge from Her Majesty's


Forces. I have here a personal recommendation from a neighbour, and I am sure the House would be interested to hear it. It says:
I have known Adrian Keith Ayres over a long period of time, and have always found him to be kind, considerate, and of good manners at all times. He is industrious and hard working, completely honest in all his dealings with other people. In his domestic life I find him kind, faithful, compassionate; in short, a man happy in his wife and child, upon him they can rely. He is not given to any violent or turbulent impulses, but he is rather the sort of person who would 'go the other mile'.
I am not quite sure what our friend means when he says "go the other mile." This is language which may be familiar to other hon. Members but is not familiar to me. It would seem to mean "turn the other cheek." The writer goes on:
I can quite honestly recommend him…and there is no doubt in my mind as to his complete reliability. I am, Yours faithfully, Howard V. Yates.
This man is a licensed lay reader in the Church of England. I am sure that this gentleman, occupying such a position, would measure his words extremely carefully. I also have a recommendation from Mr. Ayres' employers who, after a period of time, found that his usefulness had become reduced. I am not blaming the employers, and it may be that they were justified in their action. In desiring to discover as much as I could about his background, I asked them to tell me what kind of a workman Mr. Ayres was. They informed me in a letter:
We confirm that the above named"—
that is, Mr. Ayres—
has been in our employ as a production worker since May 1958. He performs the work allotted to him in a satisfactory manner, whilst his relationships with his supervisor and fellow-employees have always been most harmonious. There was general sympathy for him during the period he was prevented from working, and his return was welcomed by one and all.
I have deliberately sought independent testimony about this man's character, and, as I see it, the facts show that there is not a person in the United Kingdom who, in the position of Mr. Ayres, would not feel entitled to seek redress. There cannot be anyone who, believing in justice, would refuse him. I say this

as a deeply held opinion. Indeed, I would like to meet the person who, having endured what Mr. Ayres has endured, would not feel that society owes him something in return.
For these reasons, I humble ask the Joint Under-Secretary to reconsider this request on the basis of human compassion. When that reconsideration is made, I hope that one point will be borne in mind—that in my opinion this case is different from those which fall in other categories; that this is a man who was undoubtedly acquitted and who, I believe, was innocent rather than was found not guilty.
I hope that I have said enough for the hon. Lady to tell me that this matter will be reconsidered and that when that reconsideration takes place it will be done on a basis of compassion with regard to a person who has suffered at the hands, of the law, I believe innocently, and that amends should be made.

10.39 p.m.

The Joint Under-Secretary of State for the Home Department (Miss Mervyn Pike): I am sure that we are all grateful to the hon. Member for Burnley (Mr. Dan Jones) for the manner in which he has approached this case. He has spoken persuasively on behalf of his constituent, and I can assure him that I have listened to him with attention and sympathy. I am the more sorry that I cannot give him the answer he is seeking.
I can only repeat tonight what I have told the hon. Member in correspondence; that it is only most exceptionally that the Home Secretary feels able to make a payment to a person who has been prosecuted but not convicted of a criminal charge, and that he has not felt justified in making a payment to Mr. Ayres. To explain why the Home Secretary has reached that conclusion, I must first say something about the legal position and about the policy which successive Home Secretaries have adopted in these cases. In law there is as I am sure the hon. Member knows no obligation upon the Home Secretary, or any other member of the Executive, to pay compensation to a person who has been acquitted by the courts.


If such a person thinks he has grounds for compensation he can proceed in the civil courts and, if he is successful, recover damages. Any payment that the Home Secretary may make to such a person is paid as an act of grace. It is quite true that such ex gratia payments are made from time to time, but they are made in one set of circumstances only. The very long-standing policy has been to make a payment only where the claimant has suffered hardship through the negligence or misconduct of the police or of some other public authority or official. I will try to explain, first, why it has been thought right to restrict payments to this category of case and, secondly, why, in our view, Mr. Ayres' case is clearly outside the category.
First, as to the general policy, it goes without saying that not every prosecution for a criminal offence results in a conviction. There is bound to be a substantial proportion of unsuccessful prosecutions; the safeguards that we have built up over the years into our judicial system would not be working if there were not. In round figures, there are more than 9,000 cases every year in which a person charged with an indictable offence is acquitted or discharged. That leaves out of account the very much larger total of summary offences. Ought all these 9,000 to be compensated? Their acquittals will have been for a variety of reasons. In one case, innocence will have been unquestionably established. In another, it will be more a question of the prosecution's having failed to discharge the onus of proof; in another, the acquittal may be on some wholly technical ground. It would be difficult to argue that compensation was justified, on merits, in each such case.
Even those people who dislike the Home Secretary's present policy would concede, I think, that there would have to be some criterion for selection, and what we have to decide is what this criterion should be. There is a very real difficulty here which I ask the hon. Member to appreciate. Is the Home Secretary to make compensation only where he is satisfied that the claimant is really innocent and deserving? That sounds attractive, but let us consider its implication.
The implication would be that the acquitted person who had grounds for a claim but whose claim was rejected was not really innocent. The Home Secretary would be imposing his own standard of moral guilt or innocence on the standards applied by the courts. That would be an impossible policy, as I am sure the hon. Member would agree, and I am sure, too, that the Home Secretary would soon be in trouble in the House if he tried to work it. So it is that the Home Secretary confines compensation strictly to those cases where there has been not just a discharge or acquittal but a failure of the system through negligence or misconduct of the kind I have described.
That brings me to the specific case of Mr. Ayres. I am sure that the hon. Member is not suggesting—he certainly did not seem to—that the police or anyone else concerned with the prosecution acted in bad faith, so we can, I hope, agree that no question of misconduct arises.

Mr. Jones: I said that.

Miss Pike: What, then, the Home Secretary has had to consider is whether there was negligence in prosecuting Mr. Ayres. I have studied the facts very carefully, and I should now like to go through them again.
The murdered man, Mr. Porter, was Mr. Ayres' father-in-law. He lived in Burnley with a lodger, Mr. Ellis. At about ten o'clock on the evening of 18th February, last year, Ellis telephoned the police and told them that he had come home to find the living-room in the house in disorder, and a bloodstained axe on the table. He had not, he said, been upstairs. Upstairs, in bed, the police found Mr. Porter's body. He had been struck four blows on the neck and face with an axe, apparently while he slept. Police inquiries produced two witnesses who had seen Mr. Porter alive in the street, one of them at between 11.0 and 11.45 a.m. on that day, the other at 12.30. The medical evidence put the time of death at between 5.15 a.m. and 4.15 p.m. So the murder must, it appeared, have been committed in the earlier part of the afternoon.
The police interviewed members of Mr. Porter's family, including Mr. Ayres. They took a statement from


Mr. Ayres on 19th February, the day after the murder. In this he said that he had gone to Mr. Porter's house at about two o'clock on the 18th. He had had no reply at the front, and had gone to the back. The back door was ajar, and he went in. The drawers of the living-room dresser were open and there was an axe on the table, but this was not unusual. He had called out, received no reply, and gone upstairs to Mr. Porter's bedroom. He had remained at the door and not gone up to the bed which, as far as he could see, was empty. A sheet was on the floor and the bedclothes were turned back as if Mr. Porter had just got out. There was an overcoat over the top half of the bed so that he could just see the pillow. Mr. Ayres had then, he said, left, closing the door behind him.
The police also interviewed two of Mr. Porter's daughters, Mrs. Calvert and Mrs. Osborn. Mrs. Osborn told them that Mr. Ayres had called at her house between 12 and 12.30 on the afternoon of 18th February. He had said that he was looking for her father to speak to him about a job with which they were concerned. He had already knocked unsuccessfully at Mr. Porter's house on the way to her. She had suggested that her father might be in bed and Mr. Ayres had left saying that he would go and see. About 20 minutes to half an hour later he had come back and said that he had found the back door open and the drawers open. He had not, he said, been upstairs. He was looking, Mrs. Osborn said, quiet and pasty as though he had had a shock.
Mrs. Calvert told the police that Mr. Ayres had called at her house at about 2.30 on the 18th. He told her that he had been to Mr. Porter's house and had found the back door and the living room drawers open. He told her, too, that he had been upstairs but her father was not in bed. Mr. Ayres made a second statement to the police on 24th February. He now said that he had been to the house twice. The first time he had knocked on the front door and received no reply. After visiting Mrs. Osborn he had gone back and gone in, thinking that Mr. Porter might be asleep. After seeing the open drawers and the axe he had gone upstairs and seen the bedclothes were pulled aside. He had re-

turned to Mrs. Osborn and had not heard that Mr. Porter was dead until next day.
Mr. Ayres signed this statement. But then he told the police that he had in fact gone into Mr. Porter's bedroom, pulled down the coat which was on the bed and seen Mr. Porter's body, the head injured. He had decided not to disclose his discovery. The next day Mr. Ayres was charged with the murder. Mr. Ellis, Mr. Porter's lodger, had left Burnley after the murder and had gone to Northern Ireland where he was taken into police custody on another matter. On 24th March while in custody he told the police that they had got the wrong man in charging Mr. Ayres. He, Ellis, had killed Mr. Porter with the axe at about 6.45 a.m. on the 18th. He gave the police varying accounts of the circumstances of the killing. According to one of them, Mr. Porter had woken up while he was searching the bedroom for money and he had then attacked him. In a later statement he denied searching the room or that there was a quarrel with Mr. Porter. He said at first that he could not remember whereabouts he had hit Mr. Porter. Later he said that it was on the neck, but he could not remember which side or which way Mr. Porter was lying.
As I have indicated earlier, there were witnesses who saw Mr. Porter alive long after 6.45 a.m. and there were indications that Mr. Porter was asleep when he was killed. Mr. Ayres came before the Burnley magistrates early in April and on 4th April they committed him for trial at Lancaster Assizes. Mr. Ellis gave evidence at the committal proceedings and retracted his confession to the murder. The witness, Mr. Berry, who had seen Mr. Porter alive after mid-day some hours after Mr. Ellis said that he had killed him, also gave evidence to that effect. But the witness who had told the police that he saw him between 11 and 11.45 a.m. now said that this had happened on an earlier date.
The trial took place on 20th May and, as the hon. Member has indicated, Mr. Ayres was in custody meanwhile. At the end of the case for the prosecution Mr. Ayres's counsel submitted that there was no evidence against him to go to the jury and that it would be dangerous and unsafe to take the case further. On the


direction of the judge, the jury returned a verdict of "not guilty".
It would be impossible for me in the time available for this debate to review all the circumstances of the case and I am sure that the hon. Member would not wish me to do so, but those are the essential and important facts. The question I have to ask is whether it can be said in the light of them that it was wrong or negligent to proceed against Mr. Ayres. It is not for the Home Secretary or for me to explain or justify a decision to prosecute in a particular case, but I ask the House to remember that the prosecuting authorities have, in the interests of the community, a very difficult duty to discharge: the duty, that is, of judging when there is such a case against a suspect that it should be brought before and decided by the courts.
I am sure that that duty was discharged with all due thought and care in Mr. Ayres' case; and while realising that a frightened man may do foolish things—I have no wish to criticise or censure Mr. Ayres—it is right to stress that if there was suspicion of him it was accentuated by the lies he told the police.
This is not, then, I submit to the hon. Gentleman, a case which comes into the limited category of cases to which I referred in which compensation may be paid because of misconduct or negligence by a public authority, and I am afraid that I must end as I began by repeating that, having listened sympathetically to the hon. Gentleman, and having previously investigated this case very carefully. I cannot feel that the Home Secretary could meet his request to pay compensation in this case.

Miss Alice Bacon: I found the hon. Lady's reply somewhat disturbing and rather strange, because for five-sixths of it she seemed to be speaking in the guise of the prosecuting counsel. I cannot think of any speech which could have blackened Mr. Ayres' character more than the hon. Lady's. Nearly the whole of her speech was devoted to showing why it was right that Mr. Ayres should have been taken into custody and charged with this murder.

Miss Pike: The last thing that I wish to do is to blacken Mr. Ayres' character

in any way, but, in trying to prove that there was no negligence, it is important to show why the police took the steps they did, and that is why I took particular care to indicate the circumstances in which it was thought right to prosecute. I want to underline very clearly that there is no intention at all to blacken the character of Mr. Ayres in any way.

Miss Bacon: I am pleased to hear that, but I did not quite understand that to be the position during the hon. Lady's speech.
The hon. Lady said that there are thousands of people who are acquitted every year, but surely there must be very few who have been imprisoned for three months with a murder charge hanging over their heads, and that, I submit, is something quite special and the reason why the Home Secretary should make an ex gratia payment to this man.
The hon. Lady said that Mr. Ayres could take legal action, but she knows that in a case like this that could be very expensive, far too expensive for a man who suffered as this man did, and who lost his job because of his ordeal. I suggest that this is an exceptional case. Being in prison for three months is in itself a serious matter. I know that the courts do not sit very frequently, and we are trying to remedy this state of affairs, but it must be a terrible ordeal to be in prison for three months with a murder charge hanging over one's head. As my hon. Friend said, this was not a case of Mr. Ayres being found not guilty, but of him being acquitted for lack of evidence. If the right hon. Gentleman has the power, which he evidently has, to decide when an ex gratia payment should be made, I suggest that in this exceptional case he should use that power to compensate this man for his ordeal.

Mr. D. Jones: May I ask the hon. Lady whether, before she finally says the last word on this case, she will discuss the matter with me?

Miss Pike: In previous correspondence, I have told the hon. Gentleman that this case has been investigated very carefully. I listened with great care to what he said tonight. I should like to find some way to help him, but in all honesty I must say that we have


looked into this case very carefully. It is a very narrow category of cases in which my right hon. Friend is able to make an ex gratia payment. I hope that I have been able to prove that this case does not fall into that category, and I

believe that I would only be raising false hopes if I gave an indication that the decision on it could be reversed.

Question put and agreed to.

Adjourned accordingly at five minutes to Eleven o'clock.